Single-Family Rent Growth Strengthens In May

In a positive turn for single-family home investors, whose activity has been subdued since the end of 2022, single-family rental prices rose 3.2% nationally in May, the fastest rate in a year and in line with numbers recorded over the decade before the pandemic.

Investor sentiment has risen through the second quarter, according to RCN Capital’s Summer 2024 Investor Sentiment Survey, with this segment of buyers anticipating autumn rate cuts and softening market conditions more broadly. Despite subdued activity among all investor classes in 2023, small investor activity rose by more than 6% in the first quarter, according to data analyzed by Realtor.com.

A lack of affordability for non-investor buyers means more Americans continue to rent, supporting demand for single-family rentals, according to CoreLogic’s latest Single-Family Rental Index (SFRI). In May, all four cost tiers saw annual gains, with only the lowest-price rental tier growing below the national growth rate.

“Single-family rent growth regained strength in May,” said Molly Boesel, principal economist for CoreLogic. “However, even though growth for lower-priced rentals has slowed, properties in this price range saw gains of more than 30% over the last four years.”

At 6.2%, St. Louis posted the highest year-over-year increase in single-family rents in May, followed by New York and Seattle, each up 5.9%, and San Francisco, up 5.2%. Austin (-0.6%) and Phoenix (-0.3%) posted annual rental price losses.

The largest annual rental price gains in May occurred in the higher-priced rental tier (125% or more than the regional median), which increased 3.3% compared to 1.6% in May 2023.