Economy Watch: Rent Increases for Single-Family Slow

Year-over-year rent growth has decelerated slowly since it peaked early last year, according to the CoreLogic Single-Family Rent Index.
Source: CoreLogic Single-Family Rent Index, November 2017
Source: CoreLogic Single-Family Rent Index, November 2017

While national multifamily rents have been going up since the last recession, so have rents for single-family houses, making them popular among real estate investors. However, more recently the rate of growth for single-family rents has slowed down, according to a recent report by CoreLogic. National single-family rent prices climbed steadily between 2010 and 2017, as measured by the CoreLogic Single-Family Rent Index.

But year-over-year rent growth has decelerated slowly since it peaked early last year, as measured by the index. In November 2017, single-family rents increased 2.7 percent per year compared with a year earlier, which is a 1.6-percentage point decline since the growth rate hit a high of 4.3 percent in February 2016. The index measures changes to the cost of renting single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time.

Location Matters

Single-family rent growth varies geographically. Seattle-Bellevue-Everett, Wash., had the highest year-over-year rent growth in November 2017, with an increase of 5 percent. At the other end of the spectrum for the same period, two metro areas out of the largest 20 showed a decrease in rent prices: Honolulu (down 1.6 percent) and Miami-Miami Beach-Kendall, Fla. (down 0.2 percent).

Houston saw single-family rent growth of 2.5 percent year-over-year in November 2017, compared with a decline of 1.5 percent in November 2016. CoreLogic posited that Houston showed strength due to increased demand after Hurricane Harvey, while markets in Florida showed weakening rent growth despite Hurricane Irma. Last November, for instance, Tampa-St. Petersburg-Clearwater, showed an increase 1.5 percentage points lower compared with November 2016.