Kai Rivers
Average rents are increasing less than expected, but this varies depending on location and property type. While rents have largely remained flat, rising 0.4% year-on-year in February 2025, they are still 5.6% below their record high in August 2022. Rental price growth has slowed, with rents in some cities and metro areas decreasing. However, rents in specific locations, such as Cincinnati, Providence, and Baltimore, have seen notable increases. Additionally, the type of housing matters, with rents for smaller apartments rising while those for larger units have dropped slightly. Overall, rent prices are higher than pre-pandemic levels, and factors like limited supply and income disparities continue to influence the market.
| Characteristics | Values |
|---|---|
| Rental concessions | 35.2% of rental listings on Zillow offered concessions or discounts for renters in June |
| Rental price growth | Slowing down, with rents 35.8% higher than pre-pandemic |
| Rental affordability | The typical household spends 30.1% of its income on rent |
| Rental prices in metro areas | Down in Houston, Tampa, New Orleans, Phoenix, and San Antonio |
| Rental prices in other cities | Rising in Providence, Chicago, Indianapolis, Cleveland, and Birmingham |
| Rental prices in 2025 | Rising for 0-1-bed and 2-bed apartments for the first time since June 2024 |
| Rental market trends | Apartments are coming online at record levels, keeping rents relatively steady |
| Rental fees | Additional fees such as pet fees and pest control fees contribute to the financial burden on renters |
| Rental increases | The average rent increase per year has been 3.18% since 2012, with an 18% increase between Q1 2021 and 2022 |
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What You'll Learn
Rent prices are growing more slowly than a year ago
According to a report from Zillow, rent prices are growing more slowly than a year ago. This trend is expected to continue, with single-family rent growth projected to slow from 4.5% in 2024 to 2.7% in 2025. Multifamily rent growth is also forecast to decelerate, slowing to 1.3% in 2025 from 2.4% in 2024. This slowdown in rent price growth comes after major spikes in 2022. While rent prices remain higher than pre-pandemic levels, the pace of growth has eased.
The deceleration in rent price growth can be attributed to several factors. One factor is the increase in remote work, which has led to a migration of renters to suburban areas, increasing rents in those locations. Additionally, there has been a rise in demand for studio and one-bedroom apartments, driving up prices for available housing. Despite these factors, rent price growth is slowing, providing some relief to renters.
While rent prices are still rising, the rate of increase has slowed in many areas. For example, rent prices in Houston, Tampa, New Orleans, Phoenix, and San Antonio have decreased on a monthly basis. On the other hand, rents in Providence, Chicago, Indianapolis, Cleveland, and Birmingham have seen significant annual increases, with Providence experiencing the highest rise at 6.2%.
The affordability of rent is also influenced by factors such as additional rental fees, including pet fees and pest control charges, which can make housing less accessible. However, improvements in affordability have been observed due to a surge of apartments entering the market, increasing supply and helping to offset demand. Vacancy rates are also higher, and new apartments are more affordable, as they are filling up slowly. These factors have contributed to a renter's market, providing more options and competitive rent prices.
It is worth noting that rent price trends can vary based on location and property type. While rent prices may be growing more slowly than a year ago in some areas, other regions may experience higher increases. Overall, the slowdown in rent price growth provides a mixed picture of the rental market, with some areas experiencing relief while others continue to see rising rents.
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Rental affordability remains tight
While rents have largely remained flat for the past year, they may rise further in the coming months. In February 2025, rents rose 0.4% year-over-year, marking the first increase in six months. This trend is reflected in the latest CPI report from the Bureau of Labor Statistics, which indicates that rent continues to outpace annual inflation.
Despite the recent slowdown in rent price growth, rental affordability remains a challenge. The typical household spends a significant portion of its income on rent, with rents having increased by 35.8% since the pandemic. As of 2023, rent prices have risen at a rate 1.5 times that of wages, according to Zillow. This disparity between rent increases and wage growth makes rent feel even more expensive.
The burden of rental affordability is further exacerbated by additional rental fees, such as pet fees and pest control charges, which contribute to the growing financial strain on renters. According to the National Consumer Law Center, these "junk fees" make affordable housing even less accessible, with 40% of U.S. renters already spending 30% or more of their income on housing. This situation has prompted the Biden Administration to commit to reducing or eliminating these extra fees and promoting transparency in the rental process.
While there have been some improvements in affordability, such as an increase in the supply of apartments and rising wages among renters, rental affordability remains tight. In certain areas, such as Cincinnati, Providence, and Baltimore, significant rent increases have been observed. Additionally, in 2025, the average rent rose 0.4% year over year in February, reaching $1,607.
To conclude, while rent price growth has slowed down, rental affordability remains a pressing issue. The high cost of renting continues to impact households, especially with the added burden of extra fees. While there are efforts to improve transparency and reduce fees, it is clear that rental affordability is still a challenge for many.
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Additional rental fees are increasing the burden on renters
While average rent prices are increasing less than one might think, additional rental fees are contributing to the growing burden on renters. These extra charges, often referred to as "junk fees," are not always clearly detailed in rental listings and can surprise tenants, making housing less affordable. According to a report from the National Consumer Law Center, 40% of U.S. renters already spend 30% or more of their income on housing, and these additional fees further jeopardize their financial stability.
These junk fees can include a wide range of charges, such as pet fees, pest control fees, trash removal fees, administrative fees, utility administration fees, and facilities fees. Some tenants are even charged for services they assume are included in the rent, such as paying rent online or sorting mail. These fees can add up significantly, especially for pet owners who may be required to pay a non-refundable pet deposit along with a monthly pet fee. In one case, pet fees alone added $1,800 to the annual housing bill.
The Biden Administration has recognized the issue of junk fees and has committed to reducing or eliminating these fees and promoting transparency in the rental process. In coordination with this effort, three major rental platforms—Zillow, Apartments.com, and AffordableHousing.com—have agreed to include required fees in their rental listings, allowing renters to know the true cost of housing upfront. This transparency is expected to drive competition among housing providers and provide renters with more informed choices.
While the push for transparency is a positive step, it is important to note that rent prices are still rising, albeit at a slower pace than in previous years. As of February 2025, the average rent rose 0.4% year over year, and rents for 0-1-bedroom and 2-bedroom apartments also increased for the first time since June 2024. Additionally, the demand for rental properties continues to be high, driven by factors such as rising mortgage rates and limited housing supply. As a result, renters may still face challenges in finding affordable housing options, even with improved transparency around junk fees.
Overall, while average rent increases may be less than expected, the burden on renters is compounded by additional rental fees. The efforts to reduce and eliminate these junk fees and increase transparency are crucial steps in making housing more accessible and affordable for renters.
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Wages are rising slower than rents
While rents are increasing in many places, they are doing so at a slower pace than before. However, this is not necessarily good news for renters, as wages are rising even slower than rents.
According to a May 2024 report by Zillow, rents grew by 30.4% from 2019 to 2023, while wages only grew by 20.2% in the same period. This disparity makes rent feel even more expensive for many people. The situation is especially pronounced in certain cities, such as Tampa and Miami, which saw significant differences between wage growth and rent growth.
There are several factors contributing to the slower growth of wages compared to rents. One factor is the increase in remote work during the pandemic, which led to a migration of renters to previously low-cost suburban areas, increasing rents in those areas. Additionally, there has been a greater demand for smaller apartments, driving up the cost of available housing.
The issue of rental affordability is a pressing one, with many renters already spending a significant portion of their income on housing. According to federal standards, spending 30% of your income on rent is considered "moderately rent burdened," while spending 50% or more is classified as "severely rent burdened." Unfortunately, in 2023, half of all renters in the United States fell into the latter category, indicating a widespread struggle to afford housing costs.
While there are some indications of a rental rate slowdown, with rents rising at a slower pace than in previous years, it is clear that the disparity between wage growth and rent growth needs to be addressed to ensure that people can afford their basic housing needs.
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Rent prices vary based on location and type of housing
Location-specific factors, such as population shifts and supply chain issues, also influence rent prices. For example, historically affordable areas like the Midwest and East Coast have seen steady rent growth due to a lack of new apartment construction, creating a supply and demand imbalance. In contrast, some major U.S. cities have experienced declining rent prices due to an increase in available apartments.
The type of housing also plays a significant role in rent prices. For instance, in 2025, rents for 0-1-bedroom apartments in the U.S. rose by 0.4% year-over-year to $1,467, while rents for 2-bedroom apartments increased by 0.6% to $1,689. However, rents for 3+ bedroom apartments dropped by 0.5% to $1,990. These variations in rent prices based on the number of bedrooms highlight how the characteristics of the rental property can influence the cost.
Additionally, the rate of inflation impacts rent prices differently in various locations. For example, between 2020 and 2021, there was a 27% increase in energy prices, contributing to a 3.8% year-over-year rent increase. However, rent prices in urban areas have increased at a slower rate than the national average for the past decade, with a 2.51% annual increase since 2008. This indicates that location-specific factors, such as the cost of living and local economic conditions, also play a role in determining rent prices.
Overall, it is essential to consider both the location and the type of housing when discussing rent prices. Factors such as supply and demand, population shifts, inflation rates, and local economic conditions all contribute to the variability in rental rates across different regions and property types. Understanding these factors can help renters make informed decisions and landlords set competitive rental prices.
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Frequently asked questions
No, it depends on where you live and the type of housing you live in. For example, in February 2025, rents for 3+ bedroom apartments dropped by 0.5% year-on-year.
A large body of research has shown that when there is a shortage of homes, the cost of housing rises rapidly. Conversely, when there is a plentiful supply of housing, affordability improves.
Demand can also impact rent prices. For example, as remote work became more popular during the pandemic, deep-pocketed renters sought larger homes in previously low-cost areas, increasing rents in suburban areas.
Income can impact rent prices in two ways. Firstly, landlords may increase rents in line with rising incomes to maximise profits. Secondly, if incomes are not rising in line with rents, affordability decreases.
