With home ownership out of the question for many, the rental market for single-family homes may be a viable alternative. However, rising supply means homes are on the market longer and rental growth is slowing, according to a new report from HouseCanary.
In the first half of 2024, rental inventory nationwide increased 16.7% compared to the same period in 2023. As a result, days on the market increased 15.4% and rents increased only 2.3%. The impact was particularly harsh on the Southern states, where inventory levels rose the most. “Florida saw the largest price increase between 2021 and 2022, but our recent report showed the opposite trend, with the state seeing the most significant price decline in the first half of this year,” said Chris Stroud, co-founder and head of research at House Canary. Four of the 10 metropolitan areas with the largest inventory increases were in Florida.
The report said current trends indicate “a stable sector with healthy fundamentals, such as stable occupancy rates and balanced supply.” It predicted rents would continue to rise, but at a slower pace, “suggesting that demand for rental housing is increasing as opposed to home purchases.” The average national rent at the end of the first half of 2024 was $2,444, up 2.3% from the first half of 2023.
Demand for single-family homes is increasing in western states such as California, Arizona, Nevada and Colorado, which the report says may be due to the cost of living, job market and pleasant climate there. Five of the 10 metropolitan areas with the highest average monthly rents are in California.
The extra days homes are on the market could be a sign of migration or oversupply due to a location’s declining popularity, the report said. With the exception of Albany, NY and Anchorage, AK, all of the metropolitan areas where days on market increased the most were in the South. In Greenville, SC, they increased 145%, followed by Memphis, TN, Fairhope, AL, Savannah, GA, Myrtle Beach, SC, Augusta, GA, Huntsville, AL and Gainesville, GA.
In some major cities, particularly in the West, as well as in Atlanta, Wilmington (NC), Richmond (VA) and Raleigh (NC), the number of market days decreased.
“Rental housing remains in demand as people seek flexibility should their personal circumstances change and want to avoid the increasing financial burdens that come with buying a home,” the report said.
