On par with gains recorded in May, single-family rental (SFR) prices increased 2.9% year over year in June, signaling stabilization in single-family rental markets as low homebuyer affordability continues to support demand, per CoreLogic’s latest update to its Single-Family Rent Index (SFRI). Now returning to pre-pandemic growth rates, SFR prices increased by double digits in communities across the U.S. during 2021 and 2022.
“While single-family rents are increasing at a stable rate, median rent continues to rise and has increased over $300 over the past two years,” said Molly Boesel, principal economist for CoreLogic. Of the top-20 core-based statistical areas (CBSAs) that CoreLogic tracks, eight posted gains above 4% and seven metro areas had median rents above $3,000.
The Washington D.C. metro area led the U.S. for annual SFR price growth at 6.5%. Other markets experiencing strong gains in June were Seattle (+6.1%), New York (+5.4%), St. Louis (+5.3%), and Chicago (+4.9%). Phoenix (-0.8%) and Austin (-0.6%) posted the largest annual rental price losses of the CSBAs that CoreLogic tracks.
As SFR prices stabilize, a series of recent reports suggest real estate investor activity is rebounding in 2024 after bottoming out in 2023. Investor transactions fell 25.3% from 2022 to 2023, outpacing the 20.4% drop in non-investor home purchases last year. However, small investor purchases increased by more than 6% in the first quarter, according to Realtor.com data, and investor market share has risen in recent months, too.
In 2024, investor buyers comprised the highest share (14.8%) of first-quarter home purchases ever as overall homes sale activity lingered near decade-plus lows. Despite purchasing the fewest homes since 2020, investors bought 10.6% more homes in the first quarter of 2024 than they did in the first quarter of 2019.
The softening market drove even more investors to take advantage of price cuts and increased inventory in the second quarter. Investor purchases rose 3.4% annually from March through June — the largest increase since the second quarter of 2022 — as they bought roughly 16.8% of all homes that sold and roughly one-quarter of all low-priced homes that sold.
The $43 billion worth of homes they bought in the second quarter represents a 13.7% increase annually and the largest gain in two years. Increased investor activity in June affirms the findings of RCN Capital’s Summer 2024 Investor Sentiment Survey, which found 60% of real estate investors viewing today’s market as better or much better than it was a year ago, compared to 20% who felt it was worse or much worse.
The largest rental price increases in June 2024, per CoreLogic's SFRI, occurred at the more expensive end of the spectrum. Prices for higher-priced rentals (125% or more than the regional median) rose 3.1% in June, nearly double their gains in June 2023. Prices for higher-middle-priced rentals (100% to 125% of the regional median) also rose modestly, up 3% in June 2024 from 2.8% in June 2023.
Lower-priced rentals (75% or less than the regional median) experienced the greatest price declines, up 1.9% in June 2024 compared to 4.7% in June 2023.
