CoreLogic has released its latest Single-Family Rent Index (SFRI) analyzing the latest figures on rent growth for August 2022, which found that rent growth has slowed for the fourth consecutive month to an annual rate of 11.4%.
The SFRI revealed that U.S. single-family home rental costs posted an overall 11.4% year-over-year increase in August, marking the fourth straight month of annual deceleration. Even so, rental costs remained elevated, with annual growth running at about five times the rate than in August 2020 in the midst of the COVID-19 pandemic. A shortage of available rental units continues to fuel price growth, although inflation and worries over a looming recession should begin to temper increases.
“Single-family rent prices in August were 26% higher than before the onset of the pandemic, adding an average of $400 per month to tenants’ monthly costs and compounding other household expenses caused by inflation,” said Molly Boesel, Principal Economist at CoreLogic. “While annual rent growth is projected to continue increasing throughout the rest of 2022, those gains will likely moderate further in 2023.”
Even though rent prices have backed off recent highs, rental costs remain elevated as annual growth is running about five times the rate which was recorded in August 2020 due to a severe shortage of rental units which in turn fuels price growth.
To gain a detailed view of single-family rental prices, CoreLogic examines four tiers of rental prices. National single-family rent growth across the four tiers, and the year-over-year changes, were as follows:
- Lower-priced (75% or less than the regional median): 12.9%, up from 7.4% in August 2021
- Lower-middle priced (75% to 100% of the regional median): 12.8%, up from 8.3% in August 2021
- Higher-middle priced (100% to 125% of the regional median): 12.3%, up from 9.4% inAugust 2021
- Higher-priced (125% or more than the regional median): 10.1%, down from 10.7% in August 2021
Of the 20 metro areas shown in Table 1, Miami posted the highest year-over-year increase in single-family rents in August 2022 at 25%, continuing its year-plus streak as the country’s hottest rental market. Orlando, Florida recorded the second-highest gain at 20.8%, while Atlanta ranked third at 11.7%. St. Louis posted the lowest annual rent price gain at 4.2%.
Differences in rent growth by property type emerged after COVID-19 took hold, as renters sought standalone properties in lower-density areas. This trend drove an uptick in rent growth for detached rentals in 2021, while the gains for attached rentals were more moderate. However, this trend has recently shifted, and attached rental property prices grew by 11.8% year over year in August, compared to the 10.6% increase for detached homes. However, detached rental price growth is still outpacing that of attached homes on a two-year basis, a respective 23.7% compared with nearly 20%.
The next CoreLogic Single-Family Rent Index will be released on November 15, 2022, featuring data for September 2022.
For more housing trends, data and methodology, visit the CoreLogic Intelligence Blog, here.