Data company CoreLogic's latest May 2021 Single-Family Rent Index for the U.S. shows a national rent increase of 6.6% year over year, up from a 1.7% year-over-year increase in May 2020.
The shift in consumer preferences toward lower-density communities and single-family shelter continues to cause a ripple effect in the rental market, with single-family rent growth reaching the highest level since at least January 2005 in May. Due to high purchase prices and ongoing limited availability of for-sale homes, would-be first-time buyers are opting to remain renters instead of entering the housing market. However, similar inventory and affordability challenges are also emerging in the rental space. For the first quarter of 2021 the U.S Census Bureau reported that single-family rentals averaged 94.5% occupancy, up from 93.7% one year earlier, which has continued to drive up rent prices.
"Single-family rents rose by nearly four times the rate from a year earlier in May 2021," said Molly Boesel, principal economist at CoreLogic. "Strong job and income growth, as well as fierce competition for for-sale housing, is fueling demand for single-family rentals. Looking ahead, these market forces are expected to remain for much of the year and keep rent increases high, particularly in urban areas and tech hubs as more people return to working in person."
Among the 20 metro areas shown in Table 1, Phoenix had the highest year-over-year increase in single-family rents in May 2021 at 14%. Tucson, Arizona, had the second-highest rent price growth with a gain of 11.1%. Some tourist destinations that were hard-hit by the pandemic are also showing strong signs of recovery, with Las Vegas logging the third-highest year-over-year rent growth of 10.7%. And while Boston has experienced the largest decrease in 20 metros' rent prices for 11 consecutive months now (with an annual decline of 4.5% in May) the area's rate of decline is slowing compared to previous months.
To gain a detailed view of single-family rental prices, CoreLogic examines four tiers of rental prices. National single-family rent growth across the four tiers, and the year-over-year changes, were as follows: