Rents for single-family homes were 12.6% higher in July compared with the year-earlier month, but the gains continue to shrink from the record high seen in April, according to a new report from CoreLogic.
Most major metropolitan areas are seeing the same cooling, even in the Sun Belt which saw rents soar the most during the first years of the pandemic.
Miami continues to see the biggest gain, with rents up nearly 31% from the year before, but that’s actually down from 41% growth seen in March. Phoenix rents were up 12.2% in July, but down from an 18% gain in March.
Rents soared in warmer spots in large part due to remote workers relocating during the pandemic. They also chose single-family homes over apartments because they wanted more space. That demand fueled rent increases and hit affordability hard. With inflation now taking a bigger bite out of consumers’ wallets, demand for these high-priced rentals is waning, and landlords are losing pricing power.
“July marked the third month of slower annual gains in single-family rents,” said Molly Boesel, principal economist at CoreLogic. “However, higher interest rates this year increased monthly mortgage payments for new loans, and potential homebuyers may choose to continue renting rather than buy, helping keep price increases in check.”
Rent growth has risen a bit in some large Northeastern markets, like Philadelphia, New York City and Washington, D.C. The return to work for government employees in D.C. and tech and finance workers in New York is fueling some of that.
While Miami and Atlanta are seeing the biggest rent gains, St. Louis and Honolulu are seeing the smallest. Vacancy rates, however, continue to be extremely low across most major markets, as demand outweighs supply.