High unemployment rates ease rent price growth in May

US rent price growth decelerated dramatically in May as a spike in unemployment rates and stay-at-home orders continued to hold back rental demand.

Annual rent price increases slowed to a 10 year-low of 1.7% in May, down from a 2.9% year-over-year increase in May 2019, according to the latest CoreLogic Single-Family Rent Index (SFRI).

“Single-family rent growth slowed abruptly in May as the nation felt the full impact of the economic crisis caused by the pandemic,” said Molly Boesel, principal economist at CoreLogic. “Some metro areas, especially those that depend on tourism, were hit hardest by job losses. With unemployment rates predicted to remain high through the end of the year, we can expect to see further easing in rent growth as the economy struggles this year.”

While price growth across all four tiers cooled, the gap between low-end and high-end tiers continued to widen as prices among high-end rentals fell significantly. The national single-family rent growth across the four tiers, and the year-over-year changes, were as follows:

• Lower-priced (75% or less than the regional median) fell from 3.5% to 2.8%
• Lower-middle priced (75% to 100% of the regional median) fell from 3.1% to 1.9%
• Higher-middle priced (100% to 125% of the regional median) fell from 8% to 1.6%
• Higher priced (125% or more than the regional median) fell from 2.5% to 1.3%

Among the 20 metro areas, Phoenix posted the highest annual increase in single-family rents, up at 6% for the 18th straight month. Tucson had the second-highest rent price gain at 3.5%, followed by Charlotte at 2.9%. Honolulu, hard-hit by the collapse of the tourism market, was the only metro that saw a year-over-year drop, down to 0.4% in May.