The U.S. rental market is experiencing a cooling trend overall, but single-family rentals are defying the trend, according to a report from HouseCanary. While rent growth turned negative in March, single-family monthly rental rates increased by 6% in the first quarter of 2023 compared to the same period in 2022, reaching a median national rent of $2,395. Despite a 75% increase in inventory year-over-year, demand for single-family rentals is outpacing the inventory. The report suggests that potential homebuyers who are waiting for home prices to cool and high interest rates to come down are considering the single-family rental market.
As the Federal Reserve continues to raise interest rates, rental prices are still not expected to cool despite the increased number of listings. In the overall rental market, including apartments and multi-family rentals, vacancy rates, new construction inventory, and a tepid housing market are driving down prices.
The largest annual increase in median monthly single-family rental listing price was seen in Albany, New York, with a 30% increase from the end of the first quarter of 2022 to the same period in 2023. Except for the Naples, Florida, metro area, where median monthly rents went up by 24%, the strongest price growths indicate that renters are increasingly interested in inexpensive, growing metro areas. Areas in the Southeast that saw significant growth during the pandemic are seeing rent prices pull back from their previous highs, with Denver, Colorado, experiencing the largest decrease in rental listing price from the first quarter of 2022 to the first quarter of 2023 with a 5% drop.
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