If you’re dreading the first of the month, you’re likely not alone.
Rental costs for single-family homes were up 26% in August from the pre-pandemic prices of February 2020 — with the national median rent for a three-bedroom property jumping by $400 a month, according to Molly Boesel, principal economist for the housing-research firm CoreLogic.
“If you think about what a renter could do with that $400, that really cuts into their expenses,” Boesel told MarketWatch. “Especially as prices for everything are up across the board — it really does have a profound impact on expenses for renters.”
The average rent for a three-bedroom home was about $1,900 in July, according to CoreLogic, which released its most recent Single-Family Rent Index report Tuesday. Rents for single-family homes in popular cities like Miami and Orlando, meanwhile, were running for a median of $2,588 and $2,044 that month, respectively.
Those kinds of price increases are helping fuel inflation, while also contributing to a rise in eviction filings in some cities. Yet while U.S. single-family home rental costs increased 11.4% year over year in August, that marked the fourth consecutive month of cooling growth.
Between 2010 and 2020, rents typically grew at an annual pace of 2% and 4%, Boesel said, so prices are still rising quite a bit in comparison. But annual rental growth is nonetheless beginning to decelerate, partly because “rents have continued to grow for so long at such a high rate, that the growth was just due to slow down,” Boesel said. Prices also remain elevated due to a shortage of available rental units.
That constrained supply is both a holdover from earlier in the pandemic, when people moved from the city into areas where they could get larger single-family homes, and a consequence of would-be homebuyers waiting on the sidelines and renting for longer amid higher rates and upheaval in the housing market.
“If we calculate out the typical mortgage payment on a median-priced home, it went up 50% from the beginning of the year until now,” Boesel said. “Those monthly payments were just too much for some potential buyers, who are also now staying in the rental market.”