A cooler rental market is prompting more property managers to offer concessions in a bid to attract new tenants. Though rent growth is only slightly softer than last year, far more property managers are offering short-term perks. 

The share of rental listings with a concession — a sweetener such as free weeks of rent or free parking offered as an incentive to renters — jumped sharply last fall, and has persistently remained near one in three rentals with a concession in the months since. That has come amid a multifamily construction boom that continues to rise — more multifamily units were completed in June than in any month in nearly 50 years. That is opening up new options for renters and spreading demand across more homes.

While short-term perks in the form of concessions help rental affordability, rents have so far continued to rise, though the pace of growth has slowed. The typical U.S. rent rose 0.4% in July to $2,070, down from 0.5% growth in June and 0.6% growth in April and May. Annual rent growth slowed as well, with rents up 3.4% year over year, compared to 3.5% year-over-year growth in June. 

This slowdown in rent growth is helping the typical renter stay just on the right side of affordability. A household earning the median renter income would spend 30% of that income on rent. That is an improvement from 2022, but right on the edge of what is considered affordable. 

Property managers are responding to this cooler market by offering concessions more often. Nationwide, 33.2% of rental listings on Zillow offered a concession in July, up from 25.4% last year. 

More than half of rental listings on Zillow are offering a concession in six major metro areas: Raleigh (53.3%), Charlotte (53.1%), Atlanta (52.2%), Salt Lake City (50.9%), Nashville (50.8%) and Austin (50.5%). 

Four major metros have a smaller share of listings with a concession than last year, indicating a more competitive rental market. Those are San Jose (-9.7 percentage points), Baltimore (-5.6), Milwaukee (-1.8) and Pittsburgh (-0.2). 

The Zillow Observed Renter Demand Index, a measure of rental market tightness, has fallen by 23.3% since last July. Rather than a reflection of lessening demand, it’s more likely the massive influx of new apartments hitting the market is causing that demand to spread across more listings. That is a hallmark of a healthier market with a better balance between supply and demand. 

The rental vacancy rate, another measure of market tightness, held steady at 6.6% in the second quarter of this year, where it has sat for the past four quarterly readings. That’s the highest since winter 2021. 

The question as we look ahead is whether the current status quo of slow rent growth and elevated concessions will continue, or whether rents will actually come down. The recent mortgage rate dip could soften rental demand as more households can afford to buy a home. A labor market slowdown could also contribute to falling rents. 

Rents

• The typical U.S. asking rent is $2,070 as of July, up 0.4% month over month.
• U.S. rents are now up 3.4% from last year.
• Since the beginning of the pandemic, U.S. rents have increased by 33.4%.
• Rents fell, on a monthly basis, in one major metro area: Austin (-0.2%).
• Rents are up from year-ago levels in 48 of the 50 largest metro areas. Annual rent increases are highest in Hartford (7.9%), Cleveland (7.3%), Providence (6.7%), Louisville (6.6%) and Richmond (6%).

Single-Family Rents

• The typical U.S. asking rent for single-family homes is $2,294 as of July, up 0.4% month over month. 
• Single-family rents are now up 4.7% from last year.
• Since the beginning of the pandemic, single-family rents have increased by 40.1%.
• Single-family rents fell, on a monthly basis, in two major metro areas: Milwaukee (-0.7%), Austin (-0.02%). 
• Single-family rents are up from year-ago levels in 49 of the 50 largest metro areas. Annual single-family rent increases are highest in Cleveland (8.6%), Cincinnati (7.8%), Indianapolis (7.5%), Columbus (7.2%) and Louisville (7.2%).

Multifamily Rents

• The typical U.S. asking rent for multifamily homes is $1,916 as of July, up 0.4% month over month. 
• Multifamily rents are now up 2.6% from last year.
• Since the beginning of the pandemic, multifamily rents have increased by 27.3%.
• Multifamily rents fell, on a monthly basis, in five major metro areas: Austin (-0.3%), Phoenix (-0.2%), San Antonio (-0.1%), Jacksonville (-0.1%), and Las Vegas (-0.02%).
• Multifamily rents are up from year-ago levels in 40 of the 50 largest metro areas. Annual multifamily rent increases are highest in Hartford (8.3%), Providence (7%), Cleveland (6.5%), Louisville (6.2%) and Richmond (5.1%).

Rent Concessions

• 33.2% of rentals on Zillow offered at least one concession in July.
• The share of rental listings offering a concession increased by 0.2 percentage points (ppts) month over month in July.
• The share of rental listings offering a concession increased by 7.8ppts from last year.
• The share of rentals with a concession is lower, on a monthly basis, in 24 major metro areas. The largest monthly drops in the share of rentals with a concession are in St. Louis (-3.1ppts), Kansas City (-2.6ppts), San Antonio (-2.4ppts), Riverside (-2.3ppts) and Baltimore (-2.2ppts).
• The share of rentals with a concession is higher, on a monthly basis, in 25 major metro areas. The largest monthly increases in the share of rentals with a concession are in Birmingham (7.2ppts), Louisville (5.3ppts), Oklahoma City (3.3ppts), San Jose (3.1ppts) and Portland (3.1ppts).
• Rent concessions are up from year-ago levels in 45 of the 50 largest metro areas. The annual increase in the share of rental listings with a concession is highest in Jacksonville (17.8ppts), Charlotte (15.7ppts), Raleigh (14.7ppts), Atlanta (14.5ppts) and Austin (14.1ppts).

Rent Affordability

• The median household would spend 30.0% of their income on a typical new rental in July.
• Rent affordability increased by 0.1ppts month over month in July. The pre-pandemic share of median household income spent on rent was 28.6%.
• The most affordable metro areas for rents are Minneapolis (20.2% of median income spent on a typical new rental), Salt Lake City (20.3%), St. Louis (20.6%), Austin (21.0%), and Raleigh (21.2%).
• The least affordable metro areas for rents are Miami (42.9% of median income spent on a typical new rental), New York (42.0%), Los Angeles (37.4%), San Diego (34.1%), and Riverside (33.8%).

• The income needed to comfortably afford the typical U.S. rent — meaning spending no more than 30% of income — is $82,795.

Rental Vacancy Rate (Quarterly Data)

• The non-seasonally adjusted rental vacancy rate was 6.6% in June. The pre-pandemic average vacancy rate for this time of year was 6.6%.
• The rental vacancy rate is now up 0.3ppts from last year.
• Rental vacancy rates are highest in Memphis (17.4%), Birmingham (17.1%), Virginia Beach (12.2%), Orlando (11.9%) and Raleigh (11.8%).
• Rental vacancy rates are lower, on a quarterly basis, in 23 major metro areas. The largest quarterly drops in the rental vacancy rate are in Detroit (-7.4ppts), Cleveland (-6.4ppts), Charlotte (-3.7ppts), Indianapolis (-3.4ppts) and Jacksonville (-3.2ppts).
• Rental vacancy rates are higher, on a quarterly basis, in 27 major metro areas. The largest quarterly increases in the rental vacancy rate are in Memphis (6.4ppts), Birmingham (5.8ppts), Pittsburgh (5.2ppts), Orlando (4.4ppts) and Sacramento (4.2ppts).