Landlords are finding little room to raise rents on single-family homes. Single-family rents increased 1.7% annually in May nationwide, their slowest rate in nearly a decade, according to a new report released by CoreLogic, a real estate research data firm.
Single-family rentals comprise 35% of all rental housing in the U.S.
Prior to the pandemic in February, rent growth for single-family homes was at its highest pace in four years.
“Single-family rent growth slowed abruptly in May as the nation felt the full impact of the economic crisis caused by the pandemic,” Molly Boesel, principal economist at CoreLogic, told CNBC. “Some metro areas, especially those that depend on tourism, were hit hardest by job losses. With unemployment rates predicted to remain high through the end of the year, we can expect to see further easing in rent growth as the economy struggles this year.”
The slowdown in single-family rent growth is most pronounced in the high end of the rental market. Lower-priced rentals are still seeing rents rise due to demand, although both categories slowed in May. In the low-end tier, defined as properties with rent prices less than 75% of the regional median, single-family rental costs increased 2.8% year over year in May, down from 3.5% a year prior. High-priced rentals, defined as properties with rent prices more than 125% of the region’s median rent, rose 1.3% in May, down from a 2.5% increase a year prior.
Single-family rent growth has fluctuated across the country. For example, Phoenix continues to see strong rent increases at 6% year over year. However, Honolulu, which has seen a big decrease in tourism since the pandemic, saw its rents decline annually by 0.4%.
Source: “Coronavirus Pandemic Cuts Rent Growth to a Decade Low,” CNBC (July 21, 2020) and “Single-Family Rent Price Growth Falls in May,” CoreLogic Insights Blog (July 21, 2020)
