Driven by the work-from-home dynamic and new immigration patterns, single-family and multifamily rental prices were red hot in the early years of the pandemic.
Now, different promoters are pushing up some rents and throwing cold water on others.
Multifamily rents fell 0.8% in April compared with the same month last year, according to Apartment List. Rents have cooled as a result of a flood of new supply entering the market, with more on the way.
Apartment rents did increase for the third consecutive month, but the increase was only a very small 0.5%. Rent typically starts rising in the spring, and this year’s increase is not only smaller than usual, but also smaller than last month’s increase. The national median rent in April was $1,396.
“This is typically a time of year when rent growth accelerates heading into the busy moving season, so the fact that growth is stalling this month could be a sign that the market is heading for another slow summer,” Apartment Listings reports.
Apartment vacancy rates are also climbing, reaching 6.7% as of March, the highest level since August 2020. Largest number of apartments Apartments have been on the market for more than 30 years.
According to CoreLogic’s latest report, single-family home rents increased at a much stronger 3.4% annual rate in March. However, this annual growth continues to shrink as more supply from building rental companies enters the market.
About 18,000 single-family rental housing starts began in the first quarter, a 20% increase from the first quarter of 2023, according to an analysis of census data by the National Association of Home Builders. Over the past four quarters, 80,000 such homes have been built, an increase of nearly 16% from the previous four quarters.
“U.S. single-family rent growth overall strengthened in March, although the latest data showed some weakness,” said Molly Boesel, chief economist at CoreLogic. “Overbuilt areas, such as Austin, Texas, continued to weaken, posting year-over-year gains in March. 3.5% reduction.”
Boeser said the overall continued strength in single-family rents suggests potential homebuyers who have been priced out of the home-buying market are choosing rental-like alternatives. Mortgage interest rates have returned to the 7% range, house prices continue to rise, and it has become more difficult to buy a house.
Among the nation’s 20 largest cities, Seattle had the highest annual single-family rent growth at 6.3%, followed by New York at 5.3% and Boston at 5.2%. Leading the declines were Austin, Texas, down 3.5%; Miami, down 3.2%; and New Orleans, down 1.4%.
However, rents for single-family attached properties, known as townhouses, fell annually for the first time in 14 years.
“The decline in the attached market is driven by some markets, primarily Florida, but also including Austin and New Orleans. Some markets are gaining rental supply as multifamily apartments are completed, which competes with the attached portion of single-family apartments. – the home rental market,” Boeser added.
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