As single-family rental rates continue to grow, the Southwest is seeing huge increases, according data by CoreLogic released Tuesday.
In December, nationwide average rent for a single-family home or apartment grew by 3.1 percent year-over-year, or a little more than the 2.9 percent growth reported during the same period last year.
In Phoenix, however, rents grew by 6.9 percent, the highest in the country.
Las Vegas and Houston also landed among the top five cities with the highest change in rent prices, at 6.8 percent and 4.8 percent growth, respectively.
The reason for such growth, according to CoreLogic, involved high rates of employment despite limited new construction and low rental vacancies. As more people move to certain cities for work, rent prices are unable to keep up with demand for housing, according to the new data. In Phoenix, employment grew by 4 percent, well above the 1.7 percent national average.
“Single-family rents increased an average of three percent in 2018, exceeding the 2.7 percent average pace experienced in 2017,” Molly Boesel, principal economist at CoreLogic, said in a prepared statement. “The strengthening in rent prices reflects strong economic and labor markets.”
But high employment is just one aspect of the economy helping to escalate national rental rates. So is competition for affordable housing. Low-end rentals, or properties at which rent costs 75 percent less than a city’s average, increased by 3.7 percent in February while high-end rentals only grew by 2.9 percent.
“Low-end rental increases outpaced high- end increases for the fifth consecutive year, suggesting continued supply constraints on the lower end,” Boesel said.