Lawler: Update on Rent Trends

And an Update on New Cleveland Fed Rent Paper

From housing economist Tom Lawler:

Recently released data from various private entities that track US rent trends indicate that US rent growth has weakened considerably this Fall, and several measures suggest that rents have fallen by more than the seasonal norm over the last few months.

Here is a table showing monthly % changes in the Apartment List Rent Index (ALRI, not smoothed), the Zillow Observed Rent Index (ZORI, smoothed via 3-month moving average), and the CoreLogic Single Family Rent Index (CLSFRI, smoothed via 3-month moving average.)  I’ve included the ALRI on a 3-month moving average basis to be comparable to the other two indices.

As the table indicates, all three rent indices have shown recent declines over the last few months.  Another provider of “same-store” rent indices, RealPage, reported that its national rent index declined by 0.59% in November, the third straight monthly decline.

RealPage said that its apartment rent index was up 6.5% YOY in November, a huge drop from the 15.9% YOY gain in March 2022.  (Sadly, I don’t have access to RealPage’s historical data).  RealPage noted that the decline in rents over the past two months was larger than the “normal” seasonal decline for that time of year.

And speaking of seasonality, all the above-mentioned rent indices display modest but statistically significant seasonal fluctuations, with seasonal peaks occurring around August and seasonal troughs occurring around January.  Only Zillow reports its rent index on a seasonally adjusted basis, but below is a table showing my estimates for monthly seasonally adjusted % changes in the other indices.

Here is a chart from RealPage showing the YOY % change in its rent index, as well as the YOY % changes in the rent indices for Phoenix and Las Vegas.

These rent indices show not only has US rent growth slowed sharply, but that rents have actually begun to fall this Fall, and by more than the seasonal norm.

Note: The above was from housing economist Tom Lawler.

CR Comments and “Disentangling Rent Index Differences: Data, Methods, and Scope”