SFR Rent Growth Slows As Homes Spend More Days on the Market
Of the top 10 metros with the biggest increase in inventory, four were in Florida.
With home ownership out of the question for many, the single-family home rental (SFR) market can provide a useful alternative. However, increasing supply means homes are spending more days on the market and rent growth is slowing, according to a new report from HouseCanary.
In the first half of 2024, the inventory of homes for rent nationwide rose 16.7% compared to the same period in 2023. As a result, days on the market climbed 15.4% and rents grew only 2.3%. The impact was especially hard on the Southern states where inventory levels rose the most.
“Florida saw the biggest increase in pricing between 2021 – 2022, but our latest report showed the opposite trend, with the state seeing the most significant decrease in pricing in the first half of this year,” said Chris Stroud, co-founder and chief of research at House Canary. Of the 10 metros with the biggest increase in inventory, four were in Florida.
The report said current trends indicated “a stable sector with healthy fundamentals, such as steady occupancy rates and balanced supply.” It predicted rents would continue to grow but at a slowing pace, “indicating that there is increasing demand for rentals as opposed to home buying”. The median national rent at the end of H1 2024 was $2,444, 2.3% more than 1H 2023.
Demand for SFRs is growing in Western states like California, Arizona, Nevada and Colorado, which could be attributable to their cost of living, job markets and desirable climates, the report noted. Of the 10 metros with the highest median monthly rent price, four were in California.
The extra days homes are spending on the market could signal out-migration or oversupply due to the decreasing popularity of a location, the report said. With the exceptions of Albany, NY and Anchorage, AK, all the metros that saw days on the market rise most were in the South. In Greenville, SC they soared 145%, followed by Memphis, TN, Fairhope, AL, Savannah, GA, Myrtle Beach, SC, Augusta, GA, Huntsville, AL and Gainesville, GA.
Days on the market did fall in some metros, especially in the West, as well as Atlanta, GA, Wilmington, NC, Richmond, VA and Raleigh, NC.
“Rentals are continuing to be desirable as people are looking for flexibility, should circumstances change with their personal lives, and to avoid the ballooning financial responsibilities associated with purchasing a home,” the report commented.