from CoreLogic
— this post authored by MOLLY BOESEL
U.S. single-family rents increased 3.2 percent year over year in January 2019, up from a 2.7 percent increase in January 2018, according to the CoreLogic Single-Family Rental Index (SFRI).
The January increase was the fastest rate of increase in the SFRI since September 2016. The index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time. Single-family rents climbed steadily starting in 2010, and annual rent increases have stabilized, fluctuating between 2.7 and 3.2 percent for the past 12 months.
Using the rental index to analyze specific price tiers reveals important differences. Figure 1 shows that the index’s overall growth in January 2019 was propped up by low-end rentals, defined as properties with rents 75 percent or less of a region’s median rent. Rents on lower-priced rental homes increased 3.8 percent year over year and rents for higher-priced homes, defined as properties with rents more than 125 percent of the regional median rent, increased 2.9 percent year over year. However, rent growth is accelerating faster for the high end than for the low end. High-end rent growth was 0.5 percentage points higher and low-end rent growth was 0.1 percentage points higher than in January 2018.
Rent growth varies significantly across metro areas [1]. Figure 2 shows the year-over-year change in the rental index for 20 large metro areas in January 2019. Phoenix had the highest year-over-year rent growth this January with an increase of 7.7 percent, followed by Las Vegas (7 percent) and Tucson (5.9 percent). Orlando had the strongest year-over-year employment growth among the 20 metros in January, with job gains of 3.9 percent. This is compared with national employment growth of 2 percent. Houston had the lowest rent growth in January, increasing by just 0.8 percent from the prior year, the slowest rate of increase in this metro since the 2017 hurricane.
Footnote
[1] Metro areas used in this report are Core Based Statistical Areas. The SFRI is computed for 75 CBSAs.© 2019 CoreLogic, Inc. All rights reserved.
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