Single-Family Rent Prices Increase 3.1% Year-over-Year
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Rent prices in single-family rental properties increased 3.1 percent year-over-year in August, reported CoreLogic, Irvine, Calif.
"Low rental home inventory relative to demand fuels the growth of single-family rent prices," the CoreLogic Single-Family Rent Index report said.
The SFRI said single-family rent prices have climbed between 2010 and 2018. "However, year-over-year rent price increases have slowed since February 2016, when they peaked at 4.1 percent," the report said, noting rent increases have stabilized over the last year at a 2.8 percent monthly average.
National rent growth was propped up by low-end rentals in August, CoreLogic said. Rent prices of low-end rental houses with rents below 75 percent of the regional median increased 3.9 percent year-over-year in August, down from a 4.2 percent gain in August 2017. Meanwhile, high-end rentals with rent prices greater than 125 percent of a region's median rent increased 2.7 percent in August, up from a 1.9 percent gain in August 2017.
CoreLogic Principal Economist Molly Boesel said employment growth in popular vacation destinations is increasing single-family rent prices in those areas. "Favorable economic conditions have increased disposable income for consumers, allowing them to spend more on travel," she said. "This in turn has created more demand for business and more employment opportunities for residents in popular vacation destinations. Both single-family rent and home prices in these areas have responded with some of the highest price and rent growth in the country."
Orlando had the highest year-over-year increase in single-family rents in August at 6.1 percent (compared with August 2017), outpacing Las Vegas for the second consecutive month, Boesel said. Las Vegas experienced the second-highest rent prices in August at 5.8 percent year-over-year. Tucson once again rounded out the top three metros with the highest rent growth, settling at 5.3 percent compared to August 2017.
Rent prices continue to increase in areas affected by last year's hurricanes, such as the Houston metro area, which experienced 3.7 percent growth year-over-year. "Rent growth in Houston has remained strong since October 2017, which was the first rent increase for Houston since April 2016," CoreLogic said.
Morningstar Credit Ratings, New York, reported the average vacancy rate for single-borrower single-family rental securitizations increased by 40 basis points to 4.8 percent in August, the fourth consecutive month of increasing vacancy rates. "The increase in vacancy was likely due to a corresponding increase in lease expirations following a seasonal trend of higher lease expirations and vacancies in the spring and summer months," Morningstar said.
But vacancies in single-family rental properties should start declining in the near future following a decline in lease expirations, Morningstar predicted. The average retention rate for expiring leases increased to 77.4 percent in July from 76.9 percent in June.