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SFR Rent Growth Decreases, But Don’t Panic
Recently released information indicates that annual rent growth for single-family homes decreased slightly. But given fundamentals, renter households won’t likely convert to homeownership any time soon.
Yardi Matrix’s National Multifamily Report covering October 2022 indicated that national asking rents for single-family rentals increased by 6.6% year over year. However, the number indicated a 160 basis point decrease from September 2022. The average national SFR asking rent remained steady at $2,088. “Rents have flattened out in recent months after a period of explosive rent growth that ran between 2020 and earlier this year,” the report said.
Meanwhile, CoreLogic’s Single-Family Rent Index, which analyzes single-family rent changes nationally, reported that rents increased by 10.2% year over year in September 2022, a decrease from April 2022’s 13.9% increase. Additionally, the September rent growth “was slightly below that of September 2021,” according to CoreLogic.
Yardi Matrix nor CoreLogic suggested that current SFR slowing rent growth is anything to panic about. “(It) remained at more than twice the pre-pandemic growth rate,” said Molly Boesel, principal economist at CoreLogic. “High mortgage interest rates may be causing potential homebuyers to hit pause and remain renters, keeping pressure on rent prices.”
Yardi Matrix analysts agreed, saying that “with mortgage rates north of 7%, many household are unable to purchase homes . . . these households . . . are likely to rent, either apartments or single-family homes.”
Boesel added that the negative monthly rent change in September might indicate a resumption of “the typical seasonal pattern for the first time since 2019, which could signal the beginning of rent price growth normalization.”
When it came to higher SFR rent growth percentages, Yardi Matrix put Washington D.C. at the top, of its list, with a year-over-year rent growth well above 20% (for October 2022), followed by Sacramento’s 18% growth. Meanwhile, CoreLogic’s analysis had the Miami-Miami Beach-Kendall, FL MSA on top, with a 20.1% year-over-year SFR rent growth increase in September 2022. The Orlando-Kissimmee-Sanford, FL metro was second, with an 18.3% rent growth change from the year before.
- ◦Lease
- ◦Economy
