Nationwide, Single-Family Rental Growth in U.S. Falls Flat in November
According to CoreLogic's latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and among 20 U.S. metropolitan areas, a national rent increase of 3% year over year in November 2019, unchanged annually.
Low rental home inventory, relative to demand, fuels the growth of single-family rent prices. The SFRI shows single-family rent prices have climbed between 2010 and 2019. However, overall year-over-year rent price increases have slowed since February 2016, when they peaked at 4.2%, and have stabilized at around 3% since early 2019.
November marked the 67th consecutive month in which low-end rentals propped up national rent growth. Rent prices among this tier, defined as properties with rent prices less than 75% of the regional median, increased 3.6% year over year in November 2019, down from a gain of 3.8% in November 2018. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125% of a region's median rent, increased 2.7% in November 2019, unchanged from November 2018.
Among the 20 metro areas shown in Table 1, and for the 12th consecutive month, Phoenix had the highest year-over-year increase in single-family rents in November 2019 at 6.9% (compared to November 2018). Tucson, Arizona experienced the second-highest rent price growth in November 2019 with gains of 5.7%, followed closely by Seattle at 5.4%. Miami experienced the lowest rent increases out of all analyzed metros at 0.7%.
Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. Phoenix and Seattle experienced high year-over-year rent growth in November, driven by the annual employment growth of 2.6% and 2.9%, respectively. This is compared with the national employment growth average of 1.5%, according to data from the United States Bureau of Labor Statistics.
"Strong rent growth in the Southwest reflects strong population growth in this part of the U.S.," said Molly Boesel, principal economist at CoreLogic. "Arizona ranked third for population growth in 2019 by both number and percentage increase, according to the U.S. Census Bureau. In contrast, Illinois and Hawaii both had a decrease in population in 2019, which could account for the slower rent growth in these regions."