A “For Rent” register entrance of a constructing within the Capitol Hill neighborhood of Washington, DC, US, on Tuesday, Aug. 12, 2025.
Al Drago | Bloomberg | Getty Images
A model of this text first appeared within the CNBC Property Play publication with Diana Olick. Property Play covers new and evolving alternatives for the actual property investor, from people to enterprise capitalists, personal fairness funds, household workplaces, institutional buyers and enormous public firms. Sign up to obtain future editions, straight to your inbox.
After strengthening within the first half of this 12 months, single-family house rents started to gradual in July. This may very well be an indication that as the patron struggles, landlords are going to have to transfer to meet them.
Single-family rent costs in July elevated 2.3% from the identical month final 12 months, which is slower than the three.1% common rise a 12 months in the past, in accordance to the newest information from Cotality. Rent growth has now fallen under the decrease finish of the 10-year common vary of pre-pandemic growth.
“After a strong start to the year, single-family rent growth is clearly losing steam,” stated Molly Boesel, senior principal economist at Cotality. “In July, we broadly saw weakening in annual single-family rent growth across metro areas and price tiers.”
Rent growth was simply 0.2% larger in July in contrast with June, which is far under the historic July common month-to-month growth of 0.7%. That is a notable shift from month-to-month beneficial properties that had been stronger than typical earlier this 12 months.
“Even markets like Los Angeles, which had been buoyed by post-wildfire demand, are now cooling off. Chicago stands out as the exception, leading the nation in rent growth amid tight inventory and resilient demand,” stated Boesel.
Looking simply on the 10 largest metropolitan markets, Chicago was within the lead at 5.1% rent growth, and the New York City metropolitan space got here in second at 3.7%. Philadelphia and Washington, D.C., adopted, and whereas Los Angeles is slowing, it nonetheless rounds out the highest 5 for rent growth.
Dallas and Miami have been the bottom of the ten, with Miami seeing no rent growth in any respect. Compare that with 2022, when pandemic-driven migration to the South brought about Miami’s annual rent growth to soar 40%.
Rent growth additionally weakened in any respect value factors. For high-end properties, nationwide common rents elevated 2.9% from a 12 months in the past, down from the three.2% annual achieve seen final July. The similar development was seen in low-end rents, which rose 1.6% yearly in July, down from the two.8% achieve in July 2024.
Single-family rents had been doing a lot better than house rents over the previous couple of years, as an unlimited quantity of provide got here on the multifamily market. Single-family leases have been additionally in excessive demand due to the skyrocketing costs within the for-sale market. Families, which have a tendency to be consumers, have been choosing rental properties in good college districts as an alternative.
Single-family rental REITs, like Invitation Homes and American Homes 4 Rent, have really been constructing extra rental communities simply to sustain with that demand, so it is going to be attention-grabbing to see if this newest weakening causes them to pull again.
As Property Play famous in July, the most important single-family rental REITs have been promoting extra properties than they have been shopping for, in accordance to a rely by Parcl Labs. That, nonetheless, was as a result of they have been attempting to consolidate away from stand-alone properties and extra into full rental communities, a few of which they have been constructing.