U.S. Single-Family Rent Growth Continues to Slow While BTR Demand Flourishes

Costs are catching up – and passing – rent growth when it comes to single-family home rentals, according to the April data report from CoreLogic.

Single-family rent growth continued to slow year over year in April to 3.7%, down from about 14% at the same time in 2022, according to the Single-Family Rent Index. All markets except Las Vegas, which was down less than 1%, rose by single digits.

Single-family rental costs are still up by more than 25% since the onset of the pandemic, CoreLogic said.

“Single-family rent growth has slowed for a full year, and overall gains are approaching pre-pandemic rates,” Molly Boesel, principal economist at CoreLogic said in prepared remarks.

“Prior to 2020, single-family rent gains increased in the range of 2% to 4% for nearly a decade. However, even though growth has slowed over the past year, rents have increased by 26% since February 2020.”

She added that it appears that rent growth is bottoming out, meaning that increases in single-family rents over the past three years are more or less permanent.

“The increases, especially at lower price levels, erode affordability and cause tenants to devote more of their monthly budget to rents, leaving fewer funds for other necessities,” Boesel said.

Meanwhile, the high cost of homeownership and changing attitudes about it are pushing the build-to-rent sector to record heights, according to Doug Ressler, Manager of Business Intelligence for Yardi Matrix. “Build-to-rent housing became a very bright spot in the new home market as interest rates rose, for-sale inventory shrank, boomers looked to get out of owning and those relocating waited to buy until they were more settled,” he tells GlobeSt.com.

“The BTR market is not a copycat of the for-sale single-family housing market where starts declined dramatically in 2022’s second half,” he adds.

“Builders in the BTR niche recognized an opportunity to construct houses for those who like the idea of a private yard, more square footage than most apartments, and the potential camaraderie from being in a neighborhood with other homes.”

Over 80% of U.S. residents have chosen to live in an urban setting, as of 2023, according to Yardi Matrix.

“With that number set to rise to nearly 90% by 2050, house prices are rising, with significant consequences to housing affordability,” Ressler said.

“The high costs of buying a home and changing attitudes towards homeownership are pushing the construction of build-to-rent homes to record highs, as many Americans try to get the best of both worlds: the flexibility of renting and the comfort of a private home.”