SFR Rent Growth Hits the Brakes

While rates are still increasing in most areas, the pace has slowed, columnist Lew Sichelman writes.

Lew Sichelman
Lew Sichelman

The single-family rental juggernaut is starting to show a few weaknesses. At least, that is according to recent data from analytics firm CoreLogic.

Overbuilt markets such as Austin saw rental growth slip by 3.5 percent annually in the first quarter of 2024, the Irvine, Calif.-based company report posted in May shows. And attached properties had a year-over-year decline—albeit just a slight 0.6 percent dip—for the first time in 14 years.

Otherwise, the SFR sector is in relatively good shape, according to Principal Economist Molly Boesel.

“The continued strength in single-family detached rents indicates that potential home buyers who are priced out of the home-purchase market are choosing to rent similar alternatives,” she said in prepared remarks.

Overall, rent growth continued to increase slowly in March to 3.4 percent year-over-year. Major coastal markets led the way. Nationally, the median monthly cost for a three-bedroom house was $2,052 at the end of February.

Of the 20 metropolitan areas CoreLogic tracks, only six—Detroit, Houston, St. Louis, Atlanta, Charlotte and New Orleans—posted rental prices that were less expensive than the national average in March. Three metros—New Orleans, Miami and Austin—showed annual year-over-year rental rate declines.

On the flip side, coastal job hubs again led the sector. Seattle showed a 6.3 percent gain in March, bringing the monthly rent there to $3,325. Rents grew 5.3 percent in the New York City region to a monthly price of $3,174. And in Boston, rents rose 5.2 percent to $3,250 monthly.

The most expensive market in the first quarter was San Francisco where the median was a whopping $4,751 per month. In San Diego the median was $3,896 while it was $3,607 in Los Angeles.

Rental rates by the tiers

To gain further insight into national single-family rental rates across different market segments, CoreLogic examined four tiers of rental prices. The data is as follows:

  • Lower-priced units (75 percent or less than the regional median) were up 2 percent in March for year-over-year rental growth. But in the same period last year, rents grew by 6.7 percent.
  • Lower-middle priced homes (75-100 percent of the regional median) rose 3.4 percent as compared to a 5 percent gain from year-over-year March 2023 data.
  • Higher-middle priced units (100-125 percent of the regional median) increased 3.2 percent in comparison to 3.8 percent in the same period last year.
  • Rents for higher-priced units (125 percent or more than the regional median) rose 2.9 percent, a slight increase from the 2.6 percent year-over-year rental increase recorded in March 2023.

Meanwhile, on an attached versus detached basis, attached single-family rental prices declined by 0.6 percent year-over-year in March compared to a 3.4 percent increase for detached rentals.

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