A sustained deceleration in rent growth for single-family, investor-owned homes continued in April as regional and price-tier disparities drive market performance.
But fewer metro areas posted declines, said Cotality in a recent update to its Single-Family Rental Index, which tracks changes in U.S. single-family rent prices for attached and detached single-family homes, as well as condos.
Single-family rents rose 1.4% in April compared to a 2.8% increase the prior year, the real estate analytics firm said. Monthly increases remained “in line with typical seasonal patterns.”
“With annual gains remaining subdued and fewer markets posting declines, rent growth appears to be holding steady at a low level rather than building momentum going forward,” noted Molly Boesel, senior principal economist at Cotality.
Reflecting the broadness of the current rent slowdown, annual single-family rent growth of 1.1% in February was the slowest it had been since 2010, by Cotality’s tracking. March produced a slight recovery to 1.3% annual growth, but 16 of the 50 largest U.S. metros tracked by the index posted declines.
Only 11 cities had lower single-family rents than a year ago in April, with Florida accounting for eight compared to 10 the previous month. Chicago posted 5.5% annual growth, consistent with that Midwest hub’s strong performance over the past year.
Annual rent growth of 3% in Philadelphia and 2.6% in New York were offset by a decline of 0.4% in Miami and continued softness in Texas metros like Dallas and Houston, which recorded lackluster price gains of 0.6% and 0.1%, respectively. Atlanta saw 0.8% growth while single-family rents in Los Angeles fell 0.5%.
“Growth continues to diverge by segment and region,” Boesel added in the report, describing the recalibration underway in some Sun Belt markets as stabilizing or softening “after years of outsized growth” during and after the COVID-19 pandemic.
Vacancies on single-family rentals have risen somewhat in recent quarters, adding pressures for some real estate investors as rent growth has stalled, experts tell Scotsman Guide. Investor purchases of single-family homes declined sharply in the first quarter, sliding 23% from the previous quarter and year-ago levels amid a range of policy and economic uncertainties.
Signaling a slice of resilient demand, however, rents for pricier properties continued to outperform, up 2.1% year over year in April compared to 0.6% for lower-priced properties. Rents for detached rentals rose by 1.1% over the year and 1% for attached rentals, Cotality reported.
