State of the Single-Family Rental Market
The National Rental Report
By HouseCanary
HouseCanary, Inc., a national brokerage known for its innovation and accuracy of real estate information, released its latest National Rental Report, showing that Single-Family Rental (SFR) inventory and days-on-market continue to see gradual growth, which increased at 16.7% and 15.4%, respectively. The increases in both metrics were driven by trends seen in the southern states.
Consequently, and consistent with preceding reports, the stable growth seen in both inventory levels and days-on-market coupled with ongoing demand for rentals as an alternative to homebuying, the median national rent price also saw a slight increase of 2.3% compared to the previous year.
Chris Stroud, Co-founder and Chief of Research at HouseCanary, commented: “Our latest report generated results well-within our expectations, with a spike in inventory levels and days-on-market, particularly in the southern states. While the region saw strong and increasing demand in housing due to in-migration during the pandemic and ultimately drove real estate developments, that is no longer the case at this time. Florida is the perfect case study for this as the state saw the biggest increase in pricing between 2021-2022, but our latest report showed the opposite trend, with the state seeing the most significant decrease in pricing in the first half of this year.”
Brandon Lwowski, Senior Director of Research at HouseCanary, added: “Furthermore, we continue to see a slight uptick in listing prices, which were up 2.3% from the same period last year. People are still choosing to rent as opposed to buying homes, in order to unshackle themselves from the long-term financial commitments of purchasing. On top of that, interest rates remain at multi-year highs, which further hinder buying capabilities. With the anticipated cutting of interest rates in the remainder of the year, we look forward to seeing how this can potentially shape the housing market in the second half of 2024.”
Following a thorough analysis of the aggregated data, HouseCanary’s report identified the following key findings about the rental market for single-family detached listings in the first half of 2024:
» Available-for-rent inventory nationwide shoots up // In H1 2024, available-for-rent inventory continued to increase 16.7% compared to the previous year. As a result, this half only saw marginal year-over-year increases in median SFR prices at just 2.3%, similar to the previous report.
» Continued inventory influx results in days-on-market surge // The average days-on-market experienced a surge of 15.4% year-over-year. The increase in days-on-market was led by southern states, coupled with the region’s increase in inventory levels. Greenville-Anderson-Mauldin, SC saw the most significant increase in days-on-market, 145.2%.
» Southern states leading the increase in inventory // The top ten MSAs that experienced the most significant increase in inventory levels were all southern states, led by Florida. The increase in inventory does not necessarily signal only a decrease in demand, but may be the result of other external factors, such as ongoing real estate developments and investments that drive supply up.
» Florida’s Ongoing Rental Rollercoaster // Six out of the top ten MSAs that experienced the largest annual decrease in listing prices were in Florida, opposite of the trends seen almost two years ago in H2 2022 when Florida MSAs experienced the highest price increases. This can potentially signal a return to historically normal price levels in the state.
Additional Findings
Home buying activities remain stagnant due to macroeconomic pressures, including consistently high interest rates and a record increase in sale prices, which then showed indications of increasing demand for single-family rentals.
Rentals are also continuing to be desirable as people are looking for flexibility, should circumstances change with their personal lives, and to avoid the ballooning financial responsibilities associated with purchasing a home, such as mortgage, property taxes, and maintenance costs. Furthermore, we have observed growing trends in the demand for SFRs in Western states, such as California, Arizona, Nevada, and Colorado.
We can only presume that in-migration to these states is becoming increasingly popular due to several factors such as cost of living, increasing job market, and desirable climate.
Rental Listing Inventory
Heading into the second half of 2024, rental listing inventory is up 16.7% year-over-year (YoY) and days on market is up 15.4% YoY, indicating a stable sector with healthy fundamentals, such as steady occupancy rates and balanced supply. From a national standpoint, prospective renters can expect to see continued growth in rent prices at a slowing pace, as demand for rentals continues to rise and is expected to remain strong, alternatively replacing demand for home sales. We can expect to see this trend to continue for the foreseeable future while there has been little indication of lowering interest rates. We would note that experts do not expect a housing market correction in the second half of 2024.
At the close of H1 2024, the median national rent was $2,444, a 2.3% increase from H1 2023. Average listings also increased 16.7%, raising the average number of listings on the market to 73,207.
The number of listings for the first half of 2024 stayed consistent and did not experience a drastic increase or decrease. Median days on the market continued to increase through H1 2024.
With an increased median price, the market remains unaffordable for potential homebuyers. While there is a demand for housing, prices need to lower for future homeowners to enter the market.
Rent and Days on Market
The median price for each of the five bedroom categories ranging from 1 to 5 bedrooms saw a YoY price increase of more than 2% during H1 2024.
Each category saw a notable increase in median days on market since H1 2023. One bedroom increased 24%, 2 bedrooms jumped 19%, 3 bedrooms saw a 20% increase, 4 bedrooms experienced a 15% increase, and 5 bedrooms saw a 14% increase. The median days on market across all bedroom counts calculated increased 15.4% since H1 2023.
Greenville-Anderson-Mauldin, SC experienced the largest annual increase in days on market, jumping 145.2% from 31 days in H1 2023 to 76 in H1 2024.
Increases in days on market can signal out-migration or oversupply due to decreasing popularity of the area, driven by preference for regions where external factors and opportunities are more desirable, such as metropolitan areas with an advantageous job market.
Inventory — Largest Annual Increase
Inventory has continued to grow in the rental space with Cape Coral-Fort Myers, FL and Savannah, GA experiencing a 96.8% and 91.3% increase, respectively.
Top left (chart below) are the 10 MSAs that experienced the largest annual percent increase in inventory from H1 2023 to H1 2024 based on HouseCanary’s rental analytics. The regions are concentrated in the Southern states with four out of the 10 being in Florida. The result is likely from several different factors, including a decrease in demand and ongoing real estate developments, along with other market factors.
Single Family Rental Listing Prices
The MSAs on the bottom left (chart below) experienced the largest YoY increase in median listed rental price. As observed, there is no concentration of price increase in one state or region, the results are rather spread out.
As previously stated, we can expect rental prices to increase in the foreseeable future from a national perspective, indicating that there is increasing demand for rentals as opposed to home buying.
To view the full report, please visit www.housecanary.com.
For more information or to schedule a demo, please contact sales@housecanary.com.
