Low Supply Driving Rapid Single-Family Rental Increases

Rent prices in single-family rental properties grew faster in February than in January, reported CoreLogic, Irvine, Calif.

U.S. single-family rent prices increased 2.9 percent year-over-year in February, CoreLogic’s Single-Family Rent Index analysis said. Low rental home inventory relative to demand is fueling the rent growth, the report said.

“As with the for-sale market, supply of single-family rentals saw very low levels in February, putting upward pressure on the cost of both for-sale and for-rent homes,” said CoreLogic Principal Economist Molly Boesel.

CoreLogic’s SFRI showed single-family rent prices have climbed ever since 2010. But overall year-over-year rent price increases have slowed since peaking at 4.1 percent in February 2016 and stabilized over the last year to a 3 percent monthly average.

Low-end rentals boosted national rent growth in February, CoreLogic said. Rent prices among single-family rental properties with rent prices below 75 percent of the regional median increased 3.7 percent year-over-year during the month. Meanwhile, high-end rentals with rent prices greater than 125 percent of a region’s median rent increased just 2.4 percent.

Rent increases varied significantly by metro. Phoenix had rapid rent increases in February with only 1.9 months of single-family rentals available, the report said, noting Phoenix SFR rents have increased 8 percent since February 2018. On the other hand, Miami, which had the slowest rent increases, had 7.6 months of single-family rentals available. Miami SFR rents have increased only 1.2 percent since early 2018.

Morningstar Credit Ratings LLC, New York, said the average vacancy rate for single-family rental assets declined 20 basis points to 4.4 percent in February. SFR asset vacancy has remained under 5 percent for the past 12 months.

The average retention rate for expiring leases increased to 80.1 percent in January, “crossing 80 percent for the first time in over a year,” Morningstar said. Among the 20 largest metros, the Denver-Aurora, Colo. area and Houston had the highest vacancy rate at 5.9 percent, followed by Fort Lauderdale, Fla. at 5.3 percent.