Key Insights into the Single-Family Rental Industry
Consumer Price Index, SFR Investor Survey, SFR Market Index by David Howard The National Rental Home Council (NRHC) serves as the trade association for the single-family rental (SFR) home industry. NRHC members include owner-operators, builders, vendors, and service providers of single-family rental homes across the country. As part of our mission to provide market research and other tools to guide members through the ever-evolving housing market landscape, below are several key insights which you will find beneficial. CPI Inflation In November, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.3% seasonally adjusted, marking an annual increase of 2.7%. According to Bloomberg, both increases were in line with expectations. Shelter contributed significantly to the monthly rise, with a 0.3% increase, accounting for 40% of the overall growth. In line with expectations reported by Bloomberg, the core index, which excludes food and energy, also rose 0.3% monthly and 3.3% over the past year. Shelter increased 4.7%, the smallest annual rise since early 2022. Though shelter inflation has slowed, goods inflation is coming into focus as a potential inhibitor in the Fed’s inflation fight. Interestingly, wages have outpaced inflation by over 1% for the fourth straight month — the longest stretch since 2001. Investors overwhelmingly viewed the report as in line with expectations and are assigning a 96% likelihood of a rate cut at this week’s meeting. SFR Investor Survey The LendingOne-ResiClub Q4 Single-Family Rental (SFR) Investor Survey highlights growing optimism among property investors — 76% planning to acquire properties in 2025. Investors in the Midwest were the most bullish, with 95% saying they were likely to purchase an investment property. Also, 87% of investors expect robust rental demand. Not surprisingly, the Midwest had the highest share of investors who expected strong rental demand. Coinciding with low expectations of future property purchases, the West had the highest share of investors expecting weak rental demand and the highest share of investors expecting rent declines. Rent increases are anticipated by 84% of respondents. Just under half of those expected to raise rent foresee at least a 4% hike. Rising costs, however, will still pose challenges in the new year. Forty-eight percent of investors said home insurance premiums impacted them. Sixty percent believe mortgage rates will stay above 6% through 2025. Highlights from the Q324 SFRMI The NRHC/John Burns Research & Consulting Single-Family Rental Market Index (SFRMI) for the 3rd quarter of 2024 was released. Key findings include: » Annual blended SFR rent growth held at 5.0% nationally, unchanged from Q124 but down from 5.8% in Q223. Healthy new lease growth offset a mild slowdown in renewal rates. » While many operators are still grappling with rapid expense growth, a sizeable minority of respondents indicate that operating expenses have declined by more than -10%. These reported savings, coming mainly from Southeast operators, drove a pronounced decline in average expense growth. » Roughly one-third of respondents said their vacant properties are spending more time on the market, with operators in Texas, the Southeast, and the Southwest noting heightened competition. » About 70% of respondents indicate that financing costs impact their ability to acquire new rental homes. NRHC 2025 Membership Renewals NRHC wishes to thank you for your support and involvement in 2024. Your ongoing engagement and participation have enabled the NRHC to become a stronger advocate and voice for the single-family rental home industry. We sincerely hope you will consider renewing your membership with NRHC so that together we can create even more opportunities for the single-family rental home industry.
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