Key Insights into the Single-Family Rental Industry
Consumer Price Index, Government Affairs, Labor Market Update
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, this article contains key insights I hope you will find beneficial.
But first, the National Rental Home Council would like to congratulate Representative French Hill (R-AR) for his election to chair the U.S. House Financial Services Committee. Throughout his political career, Representative Hill has demonstrated a willingness and ability to seek bipartisan solutions to the issues and challenges facing America’s housing market. NRHC looks forward to working with Chairman Hill and the entire Financial Services Committee in the coming legislative session to expand access to quality, safe, well-located housing.
CPI Inflation
The monthly Core Consumer Price Index (CPI), which excludes food and energy prices, rose 0.2% in December 2024, following 0.3% increases in each of the previous four months. Annual core CPI, a key measure watched by the Federal Reserve, remained steady at 3.2% for the year ending December 2024.
The CPI’s measure of housing costs increased by 4.6% year-over-year through December 2024. These costs contributed to the monthly CPI increase, with shelter costs rising by 0.3% month-over-month, including rent and owners’ equivalent rent also up 0.3%. December 2024 marks a continuation of moderate growth in housing costs, though the annual increase is the smallest since January 2022.
With core CPI showing deceleration to 0.2% and solid labor market reports, it supports some investors’ expectations that the Fed’s interest rate cycle has not reached its bottom yet.
Government Affairs Update
Washington state representative Emily Alvardo (D) introduced a bill, HB 1217, to limit rent and fee increases to 7% during any 12-month period and prohibit rent and fee increases during the first 12 months of tenancy.
The Los Angeles city council passed an eviction moratorium to prohibit rental property owners from evicting residents for one year because of extra occupants or unauthorized pets that were “necessitated” by the current fires.
Labor Market Update
The US labor market closed out 2024 with a bang. Total non-farm employment increased by 256k jobs between November 2024 and December 2024. The unemployment rate remained unchanged at 4.1%. After rising in the first half of 2024, the unemployment rate has shifted sideways at either 4.1% or 4.2% for the last 7 months.
Relevant to the Fed’s interest rate path is that demand for workers does not seem to be overwhelming the market despite strong headlines. This is exemplified by the slight declines in earnings and steady hours worked.
This report puts the Fed in an interesting spot. Traders have pushed back their expectations for the next Fed rate cut by one month to June 2025. With the labor market still rolling, stubborn inflation seems to come back into view as the obvious obstacle.
National Housing Survey
In December 2024, consumers expected rental prices to increase by an average of 4% over the next year, marking a slight uptick compared to the prior month. Though 4% still outpaces expected inflation over the next 12 months, it is down considerably from the 6.3% annual growth expected in December 2023.
In the survey, 57% of respondents expected to pay more over the next 12 months, while 13% expected decreases — and 29% think they will pay the landlord the same amount in 2025.
Consumers seemed more cautious about their finances in this current survey. The share of respondents anticipating an improvement in their financial situation dipped slightly to 45%, while those expecting stability rose to 40%. Job insecurity among employed individuals grew modestly, with 22% expressing worry about potential unemployment — a two-percentage-point increase from November.
