Single-family rental prices have been on the rise for the past eight years, but their incline has been leveling off since early 2016, according to the latest data from CoreLogic.
Single-family rental prices rose 3 percent over the year in June and have risen a cumulative 4.1 percent over the first six months of this year, according to CoreLogic’s Single-Family Rent Index, released Thursday.
At the national level, single-family rental price growth reached its peak in February 2016 at 4.2 percent. For the first half of this year, prices have risen an average of 2.8 percent over the year each month.
The pace of increase has depended somewhat on the type of property.
“High demand and low supply of lower-priced single-family rental properties continue to push up rents for this segment of the rental market,” said Molly Boesel, Principal Economist at CoreLogic. “With these market forces expected to stay in place in the near term, rents on lower-priced rental properties should continue to outpace those of higher-end properties.”
On an annual basis, prices grew more for low-end single-family rentals, about 3.9 percent, compared to 2.8 percent for higher-end rentals. CoreLogic defines “low-end rentals” as those with rental prices less than 75 percent of the regional median price, whereas “high-end” rental properties are those that are more than 125 percent of the area’s median rent.
Rental price growth is concentrated in metros with “limited new construction, low rental vacancies and strong local economies” as well as areas affected by major hurricanes, according to CoreLogic.
The highest rate of single-family rent price growth among the 20 metros CoreLogic tracks took place in Las Vegas. Prices rose 5.4 percent per month on an average annual basis over the first half of the year. Orlando and Phoenix ranked No. 2 and No. 3 with an average of 5.2 percent and 4.7 percent annual price growth for each of the first six months of this year.
While nearly all 20 of the major metros CoreLogic observed experienced price increases in each of the first six months of this year, Honolulu was the one outlier. Honolulu experienced its first single-family rental price increase in seven months in May. In June, prices rose again, increasing 1.4 percent over the year.
CoreLogic also highlighted the fact that hurricane-impacted Houston “shows impressive year-over-year increases in the first half of 2018, peaking at 4.4 percent year over year in May and settling at 3.9 percent year over year in June 2018.”