CoreLogic has just released a new Single-Family Rent Index (SFRI). This index assesses the total changes in single-family rent prices across the U.S. from August 2017 through August 2018. Overall, the report shows that rent increased nationally by 3.1 percent year-over-year, whereas in the preceding twelve months rent prices went up 2.7 percent.
According to CoreLogic, a paucity of supply in single-family units is behind the rising rent prices. The SFRI indicates that single-family rent prices have gone up steadily between 2010 and 2018. However, rent prices have begun to rise more slowly ever since February 2016. Rent price increases reached a high of 4.1 percent in February 2016, but since then have slowed to an average monthly rate of 2.8 percent.
Low-end rentals continue to be those showing the highest spike in price for renters. While high-end rent prices went up only 2.7 percent, the overall average was brought up to 3.1 percent by the increase in low-end rent prices—which remains close to the overall peak year-over-year in February 2016 of 3.9 percent. Even so, the hike in prices for low-end rentals has slowed with the total average, dropping from 4.2 percent as measured in August 2017.
“High demand and low supply of lower-priced single-family rental properties continue to push up rents for this segment of the rental market,” explains Molly Boesel, a 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 rental properties.”
Rent prices have also shown a marked rise in metro areas affected by the hurricanes that struck the country last year. Houston, for example, experienced a 3.7 percent increase in rent prices in the last twelve months, and ever since the storm the city and its adjacent metro area has shown a vigorous rise in rents. In fact, the first jump in Houston’s average rent prices in over a year-and-a-half occurred in October 2017, which showed a 1.1 percent increase just a month after the clean-up from Hurricane Harvey commenced and many in the city were left without homes. In the first half of 2018, rent prices in Houston have witnessed a cumulative 3.3 percent increase, or a 3.5 percent increase if one measures year-over-year.
The SFRI doesn’t just spotlight the national average but also focuses on the 20 metro areas with the highest year-over-year increase in single-family rents. Compared to a year ago, Orlando has experienced the highest annual increase in rent prices at 6.1 percent, followed closely by Las Vegas at 5.8 percent over the same period. The increase in rent in these two popular destinations, according to CoreLogic’s report, is likely due to a corresponding growth in employment, with favorable economic conditions also allowing more Americans to travel on vacation.