Rents Are Cooling in Most US Cities, Except in This One

Nationwide Rent Prices Decline for the 19th Consecutive Month, but Supply Issues Could Reverse the Trend

Renters in the U.S. have been catching a break as rent prices continue their downward trend. For the 19th consecutive month, the national median asking rent has declined, offering much-needed relief to tenants.

According to Realtor.com’s February 2025 Rental Report, the median rent across the 50 largest metros dropped to $1,691, marking a slight $15 decrease compared to last year. However, while rents have gone down, they remain 14% higher than pre-pandemic levels.

Despite the current drop, a lack of new rental construction could mean trouble ahead. If the supply of new units slows down, rental prices could start rising again.

Why Is Multifamily Construction Slowing Down?

Lower rental prices have discouraged developers from investing in new apartment buildings. In 2024, only 294,000 multifamily units were approved for construction across major metro areas—the lowest number since 2017.

Even at the height of the pandemic in 2020, the number of new permits was higher, with 318,000 units approved.

"This represents a major retreat in multifamily construction permitting, no doubt due to the fact that rents were falling year over year throughout 2024," says Joel Berner, Senior Economist at Realtor.com.

If fewer new rental units enter the market, economists warn that rent prices will likely climb again in the coming years.

Where Are Rents Rising?

Not every city is experiencing a decline in rent prices. In fact, some major metros are seeing rents soar due to a shortage of available apartments.

New York City Leads in Rent Growth

New York City saw the highest annual rent increase in the U.S. The median rent in NYC jumped to $2,977, a 7% increase from last year.

This price surge is tied to a dip in new construction—only 42,230 new permits were issued in 2024, a 9.5% decrease from 2019.

With fewer apartments being built, renters in New York City, Boston, Baltimore, Detroit, and San Jose are feeling the pinch as competition for available units drives up prices.

Where Are Rents Dropping?

Not all cities are struggling with high rents. Several metros have seen significant rent decreases, thanks to a boost in housing supply.

In San Diego, an increase in new apartment construction pushed rent prices down by 6%, bringing the median rent to $2,667. Similarly, Birmingham, AL, saw a 5.4% drop in rent prices after a 22% increase in permitted multifamily units.

Other cities with falling rent prices include:

• Denver, CO: -6.4% ($1,773 median rent)
• San Diego, CA: -6.0% ($2,667 median rent)
• Birmingham, AL: -5.4% ($1,165 median rent)
• Austin, TX: -4.8% ($1,462 median rent)
• Phoenix, AZ: -3.1% ($1,492 median rent)

These cities show how increased housing supply can keep rent prices under control.

Studio Apartments Show the Least Rent Growth

Among all rental unit types, studio apartments have seen the least rent growth over the past five years, increasing by only 9.7%.

By comparison, two-bedroom apartments saw the largest rent growth at 18.3%, with one-bedroom units rising by 14.3%.

A typical studio now rents for $1,413, while a one-bedroom averages $1,583 and a two-bedroom goes for $1,887.

According to economists, demand for larger rentals remains strong because many young renters are delaying homeownership due to high home prices and mortgage rates.

Will Rent Prices Continue to Drop?

While renters are enjoying lower prices today, experts warn that this trend may not last.

With fewer new apartments being built, supply could soon tighten, pushing rent prices back up in the coming years.

For now, renters should take advantage of lower prices where available. If you’re considering a move, now might be the best time to lock in a better rental deal before prices rebound.

Looking for an affordable rental? Contact Nadine for available listings in your area today!