In April, Apartment List reported that rents for apartment buildings with multiple units were 0.8% lower compared to the same month last year.
However, CoreLogic’s recent report shows that rents for single-family homes are doing much better, increasing by 3.4% in March compared to the previous year.
Among the top 20 biggest cities in the country, Seattle had the largest increase in single-family rents compared to last year, followed by New York and Boston.
With the shift to working from home and changes in where people live, rent prices for both single-family homes and apartment buildings were high at the start of the pandemic.
But now, different factors are causing rents to go up in some places and down in others.
In April, Apartment List found that rents for apartment buildings were 0.8% lower than they were last year. This drop is because many new apartments became available, with even more still being built.
Although apartment rents did go up slightly for the third month in a row, the increase was small at just 0.5%. This is lower than usual for this time of year, and it’s also less than the increase seen in the previous month. The national median rent in April was $1,396.
“This is usually when rent prices start rising as people move more in the spring. The fact that prices didn’t go up much this month could mean that the market might slow down again over the summer,” according to Apartment List.
More apartments are sitting empty, with the vacancy rate reaching 6.7% in March, the highest since August 2020. Although fewer new apartment buildings are being approved, there are still a lot of units under construction. Last year, the number of new apartments hitting the market was the highest it’s been in over 30 years.
On the other hand, single-family rents are going up strong, increasing by 3.4% in March compared to the previous year, according to CoreLogic. However, this annual increase is getting smaller as more homes become available from companies building homes specifically for renting.
About 18,000 single-family homes built for renting started construction in the first quarter, a 20% increase from the same time last year, according to the National Association of Home Builders. Over the last year, 80,000 of these homes started being built, which is almost 16% more than the previous year.
“Overall, single-family rent prices in the U.S. went up in March, but there are some areas where prices are going down,” said Molly Boesel, an economist at CoreLogic. “Places that have too many homes, like Austin, Texas, saw rent prices go down by 3.5% in March.”
Despite some places seeing lower rents, the overall strength in single-family rents shows that people who can’t afford to buy homes are choosing to rent instead. Mortgage rates have gone back up to around 7%, and home prices keep going up, making it harder to buy a home.
In the 20 biggest cities in the U.S., Seattle had the biggest increase in single-family rents compared to last year, up by 6.3%, followed by New York at 5.3%, and Boston at 5.2%. The biggest drops were in Austin, Texas, where rents went down by 3.5%; Miami, down 3.2%; and New Orleans, down 1.4%.
For the first time in 14 years, rent prices for attached single-family homes, like townhomes, went down compared to the previous year.
“The decrease in attached homes is happening in some markets, mostly in Florida, but also in places like Austin and New Orleans. As more apartment buildings are finished, some markets are getting more rental homes, which compete with attached single-family homes,” Boesel explained.