US residential rental rates scale higher in March, 20% gain over 2 years (NYSE: IRT)

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The residential real estate boom is not confined to single-family home sales, according to Realtor.com’s March Rental Report. US rents are climbing higher, too, jumping almost 20% in two years.

Sunbelt metro areas are topping the list of fastest-growing rental markets, led by Miami, Florida; Riverside, California; and Tampa, Florida. Meanwhile, big tech hubs logged into the country’s smallest two-year rent increases.

The US median rental price hit a new high of $ 1,807 in March, up 19.3% from two years ago. Realtor.com points to rising demand for rentals as some would-be home buyers are priced out of the market. At the same time, vacancies sit at record lows.

March marked the eighth straight month of double-digit annual rent gains (+ 17.0%), down slightly from February’s 17.1% increase.

That may indicate the pace of rent increases is starting to slow. “March rental trends offer early signs of relief from the feverish pace of rent growth, which moderated year-over-year for the second month in a row,” said Realtor.com Chief Economist Danielle Hale. “We expect cooling to continue over time, but the jury is still out” on whether rent growth will subside to single-digits by the end of 2022, she said.

The slower rent increases in big tech hubs, though, does not necessarily mean those markets will hold bargains for prospective renters. For example, San Jose, California, where rents were largely unchanged from March 2020, claimed the country’s highest median rent at $ 3,075.

Note that apartment REIT Independence Realty Trust (NYSE: IRT) stock rose the most in the past year in this chart, when compared with peers Equity Residential (EQR) and Independence Realty (IRT) and single-family home rental REITs American Homes 4 Rent (AMH) and Invitation Homes (INVH).

Compare key stats of a handful of apartment REITs and SFR REITs in the peer comparison tab. Independence Realty (IRT) ,, which merged with Steadfast Apartment REIT in December, appears to rate most favorably in forward growth metrics.

SA contributor Jonathan Weber says the merger with STAR increases IRT’s scale and provides opportunity to capture some G&A synergies.

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