Home / Daily Dose / Pandemic Creating Downward Pressure on Rental Market
Print This Post Print This Post

Pandemic Creating Downward Pressure on Rental Market

The National Association of Homebuilders’ (NAHB) Real Rent Index was essentially flat in June, falling just 0.1%.

This is the Index’s first decline since 2013 and the annual growth rate of the Index fell to negative 1.4% after posting three months of growth, ranging between 4% and 8%.

According to the NAHB, the Index fell in June because rent inflation slowed with the Core CPI rose by 0.2%. this is the first month Core CPI increase since February.

The decline in the real rent index, according to the NAHB, could be related to the negative impact of COVID-19 on rental housing demand.

“Fallout from the virus has put downward pressure on demand in many sectors of the economy, including rental markets,” the report said.

Despite COVID-19’s impact on the market, single-family rents rose 1.7% annually in May 2020—the lowest annual growth rate since July 2010, according to CoreLogic.

CoreLogic noted rental demand is still impacted by unemployment rates and stay-at-home orders, despite local economics reopening.

Lower-priced rentals continued to prop up national rent price growth, continuing a trend from April 2014. Year-over-year growth in both tiers did slow in May 2020. Rent prices in the low-end tier—those with rent prices less than 75% of the regional average—rose 2.8% annually in May 2020.

This represented a 3.5% drop from May 2019. However, higher-priced rentals, which are those with prices more than 125% of the regions’ average rent, rose 1.3% in May 2020—down from a gain of 2.5% in May 2019.

Among the 20 metros studied by CoreLogic, Phoenix had the highest year-over-year growth in May with an increase of 6%. Neighboring Arizona city, Tucson, saw rent prices rise 3.5%, which was followed by Charlotte, North Carolina’s, 2.9% growth.

Honolulu was the only metro to experience an annual decline in rent prices, falling 0.4%. St. Louis had the largest deceleration in rent growth in May, with a reported slowdown of 3.8 percentage points from May 2019.

About Author: Mike Albanese

Mike Albanese is a reporter for DS News and MReport. He is a University of Alabama graduate with a degree in journalism and a minor in communications. He has worked for publications—both print and online—covering numerous beats. A Connecticut native, Albanese currently resides in Lewisville.
x

Check Also

Real Estate Investors Getting More Bang for Their Buck

Investors are buying up more real estate and paying less for it, as a new report finds investors now account for 15% of all residential property purchases.

Your Daily Dose of DS News

Get the news you need, when you need it. Subscribe to the Daily Dose of DS News to receive each day’s most important default servicing news and market information, absolutely free of charge.