CoreLogic reported that their single-family rent index (SFRI) for November rose 1.5 percent from its year-earlier level. This is down 0.2 percentage points from last month’s reported year-over-year rent growth rate and is down from the 2.7 percent annual rent growth rate for single-family rentals reported in November 2023.
Adjusted vs. nominal
The history of the overall SFRI growth rate since January 2020 is shown in the first chart, below. The chart shows both the nominal year-over-year single-family rent growth rate and also the wage-adjusted and CPI-adjusted rates. The wage-adjusted rate is the year-over-year nominal rate less the year-over-year rate of wage growth as measured by the seasonally-adjusted average hourly earnings of production and non-supervisory employees. The CPI-adjusted rate is the year-over-year nominal rate less the year-over-year rate of growth in the unadjusted consumer price index (CPI-U).
The chart shows that nominal SFR year-over-year rent growth rate has recently been falling. CoreLogic reports that the rent growth rate is now at its lowest level in 14 years.
While the overall rate of inflation has also been falling, it has not fallen to as low a level as the rent growth rate. This leads to negative growth in CPI-adjusted rents.
Nominal wage growth has remained steady over the last 8 months at nearly 4 percent. Therefore, the falling rate of rent growth has resulted in declining real rents. However, the decline since the end of 2022 has not yet come close to making up for the surge in real rents in 2021 and 2022.
For reference, Yardi Matrix found that single-family rent growth in November was 0.3 percent year-over-year as rents fell $7 for the month. However, Yardi Matrix focuses on properties of 50 or more units while CoreLogic takes a broader look at the single-family rental market, since small holdings represent a majority of the market.
Ranking the metros
CoreLogic reports the year-over-year rate of growth in the SFRI for a select group of 20 metropolitan areas. Detroit remained in the top spot with year-over-year rent growth of 6.1 percent, up 0.1 percentage point from its reported rate for last month. Washington D.C. was in second place with rent growth of 5.5 percent. Honolulu rounded out the top 3 with rent growth coming in at 4.3 percent.
At the other end of the list, Austin saw rents decline 2.4 percent year-over-year. Rents fell 1.5 percent in Boston and 1.2 percent in Phoenix.
CoreLogic is a data and analytics company. It calculates the SFRI using “a repeat pairing methodology to single-family rental listing data in the Multiple Listing Service.” The CoreLogic report is available here.
