U.S. single-family rents increased 3% year over year in March 2020, the same rate of increase as March 2019, according to the CoreLogic Single-Family Rent Index (SFRI). 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 were on the rise in early 2020 prior to the COVID-19 outbreak, having increased by an average of 3.1% year over year for the first three months of the year. Impacts from state and local shutdowns on the rental market will be apparent in the coming months.
Using the rent index to analyze specific price tiers reveals important differences in rent growth. Figure 1 shows that the index’s overall growth in March 2020 was propped up by low-end rentals, defined as properties with rents 75% or less of the median rent of the metro area. Rents on low-tier rental homes increased 3.9% year over year and rents for high-tier homes, defined as properties with rents more than 125% of the metro-area median rent, increased 2.7% year over year. Rents for low-tier homes have been outpacing than those of high-tier homes since April 2014, and while the difference in these growth rates has narrowed over time, it widened again in March 2020.
Rent growth varies significantly across metro areas. Figure 2 shows the year-over-year change in the rental index for 20 large metropolitan areas in March 2020. Phoenix had the highest year-over-year rent growth this March as it has since late 2018, with an increase of 6.8%, followed by Seattle (+6.2%) and Tucson (+5.3%). While none of the 20 metro areas showed decreases in rent, both Philadelphia and Honolulu recorded sub-1% growth in March. Philadelphia also had the largest deceleration in rent growth in March, showing annual rent growth of 3 percentage points lower than in March 2019. Seattle had the largest acceleration in rent growth in March, with rents increasing 5 percentage points faster than in March 2019. Employment gains turned negative in four of the 20 metros tracked in the report in March, a trend that will soon reach the remaining metros, likely impacting single-family rental prices.