Rent single-family home rises cool for the third month in a row

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On February 7, 2022, in Houston, Texas, a “For Rent” sign was placed near a home.

Brandon Bell | Getty Images

Rents for single-family homes were 12.6% higher in July than the same month last year, but according to a new report from CoreLogic, profits continue to shrink from the historic high in April.

Most major metropolitan areas are seeing the same cooling, even in the Sun Belt, where rents rose the most during the early years of the pandemic.

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Miami continues to record the biggest gains, with rents up nearly 31% from the year before, but that’s down from March’s 41% growth. Rents in Phoenix rose 12.2% a year in July, compared to an 18% increase in March.

Rents rose in warmer places, largely due to the relocation of remote workers during the pandemic. They also chose single-family homes over apartments because they wanted more space. Demand quickly fueled rents and hit affordability hard. With inflation taking a bigger bite out of consumers’ wallets, demand for these expensive rental properties is dwindling and landlords are losing pricing power.

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“July marked the third month of slower annual increases in single-family rents,” said Molly Boesel, chief economist at CoreLogic. “However, higher interest rates this year increased monthly mortgage payments for new loans, and potential homebuyers may choose to continue renting rather than buying, keeping price increases in check.”

Rental growth has picked up slightly in some major northeastern markets, such as Philadelphia, New York and Washington, DC. The return to work for government employees in DC and tech and finance workers in New York is fueling some of that.

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While Miami and Atlanta are seeing the biggest rent increases, St. Louis and Honolulu are seeing the smallest. However, vacancy rates remain extremely low in most major markets as demand exceeds supply.

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