Even as the overall U.S. rental market cools down, single-family rentals are bucking the trend, according to a new report.
While the yearly rent growth turned negative in March after a period of double-digit price growth in 2021 and 2022, single-family monthly rental rates increased from $1,880 to $2,330 at the close of the first quarter of 2023 (last week of March) compared to the same period in 2022, a 6% increase. This was despite a 75% increase in inventory year-over-year, from 36, 688 to 64, 210, according to a HouseCanary analysis shared exclusively with USA TODAY.
As uncertainty looms in the housing market, with consecutive Fed interest rate hikes, elevated mortgage rates and still-high home prices, potential home buyers are considering the single-family rental market, says Brandon Lwowski, director of research at HouseCanary.
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“Demand for those rentals, on the single family detached side, is outpacing the inventory,” he says. “So we’re still seeing this rise in prices.”
Would-be homebuyers who were waiting for home prices to cool and waiting out high interest rates have helped push the median price of listings to reach multi-year highs.
At the close of the quarter, the median national rent for single-family detached rental was $2,395, a 20% increase since the same period in 2021 and a 6% increase since the same period in 2022. Additionally, there was a weekly average of 64,210 listings on the market, up 75% year over year.
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As the Federal Reserve continues to hike rates, rental prices are still not expected to cool despite the increased number of listings, says Lwowski.
For the overall rental market, including apartments and multi-family rentals, the steadily increasing vacancy rates, new construction inventory and a tepid housing market are driving down prices.
Largest Annual Increase in median monthly single-family rental listing price
The monthly median rental price in the Albany, New York, area went up by 30%, from $1,519 to $1,974 from the end of the first quarter of 2022 to the same period this year. Except for the Naples, Florida, metro area where median monthly rents went up 24%, from $4,637 to $5,756, the strongest price growths indicate that renters are increasingly interested in inexpensive, growing metro areas.
Metros with largest annual decreases in median monthly single-family rental prices(Photo: HouseCanary)
Largest annual decrease in median monthly single family listing price
Areas in the Southeast that saw significant growth during the pandemic are seeing rent prices pull back from their previous highs. Denver, Colorado, for example, saw the largest decrease in rental listing price from the first quarter of 2022 to the first quarter of 2023 with a 5% drop.
Swapna Venugopal Ramaswamy is a housing and economy correspondent for USA TODAY. You can follow her on Twitter @SwapnaVenugopal and sign up for our Daily Money newsletter here.
