Digging Into the Slowdown of SFR Rent Growth

Single-family rent growth remains positive for most U.S. cities. However, the rate of growth has slowed significantly in the second half of 2023 in almost every city and in all regions of the U.S.. This has been apparent for several months now and it has been reconfirmed by Rentometer, which just published a report on SFR rent growth patterns across the U.S.

Not surprisingly, various factors influence rental prices, including high demand, low supply of inventory, and rising interest rates. The housing market also continues to evolve, impacting rent prices in different markets and regions. Following is Rentometer’s analysis on the U.S. markets and where SFR rent trends are headed.

Four out of six regions in the U.S. showed improved year-over-year rent growth for single-family rentals in the fourth quarter of 2023 compared to the third quarter of 2023. Nationally, rent growth was 5.3% in the fourth quarter of 2023, according to a report compiled by Rentometer, Inc.

Improved rent growth in the fourth quarter of 2023 vs. the third quarter of 2023 was experienced in the following areas: Midwest +9.4%, Mountain +3.2%, Southeast +3.7%, and Southwest +6.3%.

The Midwest region experienced some of the largest year-over-year rent increases, with Birmingham, Michigan taking the lead at 39%. In that same region, Springfield, Illinois had the largest decrease of -12%. Large Midwest cities such as Cincinnati, Ohio and Wichita, Kansas saw year-over-year increases of 19% and 18% respectively, while Detroit, Michigan was flat with no change.

The Southwest region saw a 6.3% increase in rent growth in the fourth quarter of 2023 vs. the third quarter. Midlothian, Texas had the largest year-over-year rent increase of 21% in that region. Flagstaff, Arizona, on the other hand, experienced the largest rent decrease of -7% in the Southwest.

Rent growth in the Southeast was up 3.7% in the fourth quarter of 2023. Vero Beach, Florida had the largest year-over-year rent increase of 30%, with Pompano Beach, Florida experiencing a decrease of -14%. Both Atlanta, Georgia and Charlotte, North Carolina saw year-over-year increases of 8% in rent. At the same time, Miami, Florida experienced a decrease of -6% year-over-year.

In the Mountain region of the nation, Pueblo, Colorado had the largest year-over-year rent increase at 16%, while St. George, Utah saw the largest decrease of -4%. Both Boulder, Colorado and Aurora, Colorado saw year-over-year changes of 7% in rent, while Nampa, Idaho had a decrease of -3%.

According to the report, the Northeast and Pacific regions showed lower rent growth in the fourth quarter of 2023 vs. the third quarter of 2023, 3.6% for each.

In the Northeast, Jersey City, NJ had the largest year-over-year rent increase of 24%, with Erie, Pennsylvania not far behind at 21%. Brooklyn, NY had the largest decrease of -29%, bringing average rent from $3,630 to $2,575 monthly.

Finally, in the Pacific market, La Quinta, California had the largest year-over-year rent increase of 37%, bringing average rent to $5,346 monthly. Yet, Yakima, Washington had the largest decrease of -9%.