Rent growth for single-family homes drops to a four-year low
U.S. single-family rental properties posted 2% rental price growth during the year ending September 2024, according to a recent report. KernLogic report. That is less than the annual growth of 2.4% in August.
The real estate data and solutions company reported that annualized gains were well below the pre-pandemic single-family housing growth rate (SFR) of 3.5%. For detached rental properties – or detached homes – rental growth fell to 2%. This marked two consecutive months of slowing price growth for detached rental properties, following year-on-year increases of 2.6% in July and 2.3% in August.
“Annual rent growth for single-family homes slowed in September to the lowest level in more than four years, and monthly rent growth showed a second month of below-season trend growth, making it clear that single-family rental growth is slowing,” Molly Boesel, CoreLogic chief economist, said in a statement.
“While about a third of metros showed stronger rent growth than in the previous year, more metros showed rent declines than in the previous report. While a drop in rents will be welcome news for tenants, increases since 2020 are still 32%.”
CoreLogic also noted that the SFR price drop is happening in a few markets in Texas, California and Florida.
Of the 20 metropolitan areas that CoreLogic tracks, Detroit leads the way with the highest annualized SFR growth of 5.2%, followed by Seattle (5%) and New York (4.9%). In August, Seattle led the pack (5.8%), followed by New York (5.5%) and Washington, DC (5.5%).
Detroit ($1,764) posted the second-lowest average monthly rent, behind Philadelphia ($1,656). Three of the top five areas experiencing annual rent growth in September (Seattle, New York and Washington, DC) had average prices above $3,000. Chicago (No. 4) had an average rent of $2,663.
CoreLogic’s monthly SFR index analyzes rental prices in four price levels. Lower priced rental properties are rental properties that are below the regional median. Rents in the lower middle segment are between 75% and 100% of the regional median. Rents in the upper middle segment range from 100% to 125% of the regional median, while the more expensive rents are above 125% of the regional median. CoreLogic surveyed properties in nearly 100 U.S. metro areas, including 43 spanning all four tiers.
The report pointed out that price growth for expensive rental properties, attributed to luxury properties, was greater than price increases for properties in the lowest segment. This is a sign that some tenants are taking advantage of the increased economic breathing space, CoreLogic explains.
