April Single-Family Rents Up 3%
CoreLogic, Irvine, Calif., said low rental home inventory relative to demand fueled growth of single-family rent prices in April.
The company’s monthly Single-Family Rent Index, which analyzes single-family rent price changes nationally and among 20 metropolitan areas, reported a national rent increase of 3% in April, compared to 2.8% a year ago. The report said 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 4.1%, and have stabilized over the past year with a monthly average of 3%.
The report said national rent growth continued to be propped up by low-end rentals in April. Rent prices among this tier, defined as properties with rent prices less than 75% of the regional median, increased by 3.6% year over year in April, down from the 3.8% a year ago. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125% of a region’s median rent, increased by 2.5% in April, up from 2.4% a year ago.
Among the 20 metro areas analyzed, Phoenix saw the highest year-over-year increase in single-family rents in April at 6.9% from a year ago, followed by Las Vegas and Tucson, Ariz., at 6.5%. For the third consecutive month, Miami experienced the lowest rent increases of all analyzed metros at 0.9%
Molly Boesel, principal economist with CoreLogic, said metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. Phoenix experienced high year-over-year rent growth in April, driven by the annual employment growth of 3.2%. This is compared with the national employment growth average of 1.8%, according to data from the United States Bureau of Labor Statistics.
“While the housing market is cooling, home prices remain high in some of the nation’s top metros,” Boesel said. “This may be contributing to the growing rental demand, as many potential buyers are being priced out of the market.”
In a separate report, Morningstar Credit Ratings LLC, New York, said the blended rent change for single-borrower, single-family rental securitizations rated by Morningstar increased to 5.5% in April from 4.7% in March. The average vacancy rate was unchanged after the March rate was revised up 10 basis points to 4.1%. The average retention rate for expiring leases increased to 80.2% in March, the latest month available, from a revised 79.1% in February.
Morningstar said among the top 20 metropolitan statistical areas, Fort Lauderdale and Houston had the highest vacancy rate at 6.5% and 5.4%, respectively. The Las Vegas MSA experienced the highest blended rent growth at 8.5%, followed by the Sacramento MSA at 8.4%. The Chicago and Fort Lauderdale MSAs experienced the lowest blended rent growth at 3.1% each, followed by Houston at 3.4%. While the Chicago MSA had the lowest rate of rent growth, it also had the lowest month-end vacancy rate at 2.4%.
