HouseCanary, Inc. has released its latest National Rental Report, which showed that Single-Family Rental (SFR) inventory continues to expand with a 31.5% surge in Q3 2023 compared to the previous year.
Average days on market grew 28.4% year-over-year to 27 days, attributed to the surplus of available-for-rent inventory, while price increases were marginal at just 0.7%, indicating SFR prices may have reached their peak, particularly when compared to the 6% increase observed in Q1 of this year.
Southern states have experienced the most upward growth in the number of listings available for rent in the market. Most notably, MSAs located in North Carolina, Florida, Tennessee, Georgia, and Alabama accounted for 100% of the top 10 MSAs, seeing the largest listing increases.
"Q3 2023 reaffirms the single-family rental market's resilience, with steady year-over-year growth in listings and rental prices," said Chris Stroud, Co-Founder and Chief of Research at HouseCanary. "Lingering market uncertainties are mainly driving this, with potential buyers opting to rent for property investment risk mitigation. The marginal rise in median SFR prices, much smaller in comparison to the substantial growth in days on market and net new listings (up by 28.4% and 31.5% year-over-year, respectively), reflects a surplus of available-for-rent inventory.”
Following a thorough analysis of the aggregated data, HouseCanary’s report identified the following key findings about the rental market for single-family detached listings in the third quarter of 2023:
- Rent prices remain historically high despite a very slight increase in year-over-year price growth. With a 31.5% year-over-year increase in the weekly average of listings in Q3 of 2023, prices of single-family rentals have only seen a slight year-over-year increase of 0.7%.
- Southern states have experienced the most upward growth in the number of listings available for rent in the market. Most notably, MSAs located in North Carolina, Florida, Tennessee, Georgia, and Alabama experienced the largest growth in inventory year-over-year and made up 100% of the top 10 MSAs seeing the largest listing increases.
- Four California MSAs now top the list for the nation’s highest median rent prices for Q3 2023. MSAs in California, Connecticut, and Florida boasted some of the most expensive single-family median monthly rental prices. MSAs in these three states comprised 80% of the 10 highest average monthly rents across the country, with San Diego-Carlsbad, California, and Los Angeles-Long Beach-Anaheim, California, taking the top spots with a median price of $5,449 and $5,202 per month, respectively.
- By the end of Q3 2023, rental properties stayed on the market for an average of 27.1 days, a 28.4% increase since the same period in 2022. Most notably, all of the top 10 MSAs showing the largest annual increases in days on market year-over-year are located in the South of the United States. Of which, Raleigh, North Carolina boasted a 281% increase since Q3 2022 and claimed the top spot on the list.
- Experts, economists, and the Federal Reserve foresee ongoing rate hikes, but at a more moderate pace compared to earlier this year. This is expected to create a better market for purchasing activity to pick up speed. Additionally, the commencement of student loan repayments in October is projected to result in downward pressure on interest rates in the future due to reduced consumer discretionary income affecting inflation.
“Projections align with our Q2 2023 outlook, indicating that median SFR prices may have plateaued, with limited room for further escalation," said Brandon Lwowski, Senior Director of Research at HouseCanary. "Anticipated smaller rate increases, along with the initiation of student loan repayments, promise a more favorable environment for purchasing activity to gain momentum in the future."
To read the full report, including more data, charts, and methodology, click here.