U.S. single-family housing has hit its slowest rent price growth last May, marking its lowest slump in ten years.
The uncertainty brought by the coronavirus pandemic has significantly slowed down U.S. single-family rent price growth. In a report published by CoreLogic, rents for the said segment has dropped to a decade low.
May rent growth dropped to a decade low
Single-family rent price growth for May, as per CoreLogic Single-family Rent Index (SRFI), rose for about 1.7% annually down from last year’s 2.9% year-over-year increase in the same period. It also recorded the slowest rent growth in ten years, way back July 2010.
Rent price growth had stabilized for an annual average of 3% earlier this year, with February earning 2.4% and is the highest in the last four years. However, the pandemic turned the tables for U.S. single-family housing rental market and took a sharp downturn in May.
“Single-family rent growth slowed abruptly in May as the nation felt the full impact of the economic crisis caused by the pandemic,” the principal economist of CoreLogic Molly Boesel said.
Most metros, specifically those that are tourist-dependent, were hit the hardest, according to Boesel. The high unemployment rate has also contributed—and is also expected to ignite—the segment’s slump. Yet as per the current situation of COVID-19 in the United States, Boesel anticipates “further easing in rent growth.”
In Manhattan, massive, family-sized housings are in decline as well. As told by Douglas Elliman and Miller Samuel, the segment is the most affected as Manhattan’s vacancy rate in June dived massively too.
Single-family housings account for 35% of overall rentals in the U.S. and are valued over $2.3 trillion per CoreLogic.
Lower-priced rentals make up overall growth
Meanwhile, lower-priced rentals in the said segment are climbing at a fast pace even amid pandemic. As per CoreLogic’s index, lower-priced housings had massively contributed to the segment’s overall growth with a 2.8% increase, while higher-priced rentals are at low with a 1.3% increase only.
The demand for single-family rentals varies in every city as well. Phoenix and Tucson in Arizona, for instance, are the two cities with the strongest rent price growth—earning 6% year-over-year and 3.5% year-over-year, respectively.
The two cities were then followed by Charlotte, North Carolina, at 2.9%. Honolulu came last and recorded a 0.4% increase only as rentals decline due to travel restrictions and lack of tourists.
The report also emphasized how low employment rate is relative to the single-family rents demand, citing cities with the highest unemployment rate had seen the slowest rent growth.
“U.S. unemployment rates remained elevated in May. […] adversely impacting rental demand and slowing rent price growth,” the team wrote.
Price rent growth in Detroit, for instance, remained stagnant as people who lost their jobs hit 20%. Unlike Phoenix, with a strong employment rate.