Construction catches up with demand, giving renters an affordability break
Key Takeaways:
- Rental affordability is better than it’s been in four years, requiring 28.4% of median household income nationwide.
- Landlords are offering concessions on 37.3% of rentals on Zillow, a record high for September.
- Single-family rents ease to 3.2% annual growth, the slowest since 2016.
Rental affordability is better than it’s been in four years, giving prospective renters a slight break on new leases. Subdued rent growth and record-breaking concessions from landlords are turning up in the market now as a result of a deluge of apartment construction completions last year.
Builders responded to rising household formation and a surge of demand for housing during the pandemic, finishing more multifamily units in 2024 than any year since 1974. Fewer restrictions on building in the South allowed builders to react more quickly and efficiently to renters’ needs, helping create pockets of affordability.
National rent growth in multifamily units on Zillow eased to 1.7% over last year in September — the second-lowest annual growth seen since 2021. A weaker labor market is also contributing to slower rent growth in 2025, as mobility in the rental market tends to follow mobility in the labor market.
Zillow’s new rent market dashboard shows falling apartment rents are concentrated in the South, the Sunbelt and the Mountain West regions.
Apartment rents are falling fastest year over year in Austin (-4.7%), Denver (-3.4%), San Antonio (2.3%), Phoenix (-2.2%), and Orlando (-0.8%). Higher rent growth is centered in areas with stricter building codes and in high-demand, relatively affordable areas, led by Chicago (6%), San Francisco (5.6%), New York (5.3%), Providence (4.8%), and Cleveland (4.2%).
In recent years rental managers have turned to concessions, such as months of free rent or parking, instead of lowering rents. Now 37.3% of rentals on Zillow offer some sort of freebie — a new record high for September and up from 14.4% in 2019.
Concessions will likely continue to rise, typically peaking in winter or early spring. As concessions become the norm, property managers may need to consider price cuts, particularly as the year winds down. Competition among prospective renters tends to fall off over the cooler winter months.
Even single family rentals – which have significantly outperformed apartments in recent years – are feeling headwinds. September’s 3.2% year-over-year rise in single-family rent is the smallest annual growth since 2016.
Affordability rises nationwide as rents ease
Cooler growth and even declining rents in some rental markets are contributing to better nationwide affordability than renters have seen in four years. A typical rental now requires 28.4% of the median household income nationally, down slightly from 28.8% a year ago and below the roughly one-third threshold where housing becomes a financial burden.
Rent affordability improved over the past year in 38 of the 50 largest U.S. metros, and renters in Denver, Austin, Miami, San Antonio and Phoenix were the biggest beneficiaries.
Rents
- The typical asking rent is $1,979 in September, down 0.1% month-over-month. Since the beginning of the pandemic, rents have increased by 36.1%.
- Rents are now up 2.3% from last year.
- Rents fell, on a monthly basis, in 34 major metro areas. The largest monthly drops are in Austin (-0.8%), Denver (-0.7%), Las Vegas (-0.5%), San Antonio (-0.5%), and Boston (-0.5%).
- Rents are up from year-ago levels in 46 of the 50 largest metro areas. Annual rent increases are highest in Chicago (6%), San Francisco (5.6%), New York (5.2%), Cleveland (4.9%), and Providence (4.6%).
Single-Family Rents
- The typical asking rent for single-family homes is $2,256 in September, up 0.1% month-over-month. Since the beginning of the pandemic, single-family rents have increased by 44%.
- Single-family rents are now up 3.2% from last year.
- Single-family rents fell, on a monthly basis, in 22 major metro areas. The largest monthly drops in single-family rents are in Providence (-1.2%), Seattle (-0.7%), Austin (-0.5%), Las Vegas (-0.4%), and Salt Lake City (-0.4%).
- Single-family rents are up from year-ago levels in all 50 of the largest metro areas. Annual single-family rent increases are highest in Milwaukee (5.9%), Indianapolis (5.6%), St. Louis (5.5%), Chicago (5.5%), and Pittsburgh (5.4%).
Multifamily Rents
- The typical asking rent for multifamily homes is $1,809 in September, down 0.2% month-over-month. Since the beginning of the pandemic, multifamily rents have increased by 28.2%.
- Multifamily rents are now up 1.7% from last year.
- Multifamily rents fell, on a monthly basis, in 37 major metro areas. The largest monthly drops in multifamily rents are in San Antonio (-0.8%), Denver (-0.8%), Austin (-0.7%), Tampa (-0.7%), and Orlando (-0.6%).
- Multifamily rents are up from year-ago levels in 34 of the 50 largest metro areas. Annual multifamily rent increases are highest in Chicago (6%), San Francisco (5.6%), New York (5.3%), Providence (4.8%), and Cleveland (4.2%).
Rent Concessions
- 37.3% of rentals on Zillow offered concessions in September, up from 36.7% in August and 35.8% in September 2024.
- The share of rentals with concessions is lower, on a monthly basis, in 13 major metro areas. The largest monthly drops in the share of rentals with concessions are in Birmingham (-3ppts), Los Angeles (-1.9ppts), Minneapolis (-1ppts), Cleveland (-1ppts), and San Francisco (-0.8ppts).
- The share of rentals with concessions is higher, on a monthly basis, in 37 major metro areas. The largest monthly increases in the share of rentals with concessions are in Pittsburgh (4.5ppts), Seattle (3.7ppts), Richmond (3.3ppts), Raleigh (3.2ppts), and Hartford (3.1ppts).
- Rent concessions are up from year-ago levels in 33 of the 50 largest metro areas. The annual increase in share of rental listings with concessions is highest in Memphis (10.9ppts), Denver (10.6ppts), Houston (9.4ppts), Orlando (8.1ppts), and Las Vegas (8ppts).
Rent Affordability
- The median household would spend 28.4% of their income on a new rental in September.
- The share of median household income spent on rent decreased by 0.1ppts month-over-month in September. The pre-pandemic share of median household income spent on rent was 26.7%.
- The share of median household income spent on rent decreased -0.4ppt from last year.
- The most affordable metro areas for rents are Austin (18.2%), Salt Lake City (19.5%), Raleigh (19.7%), Minneapolis (19.9%), and St. Louis (20.1%).
- The least affordable metro areas for rents are New York (40.6%), Miami (38.6%), Los Angeles (35.5%), San Diego (32.0%), and Riverside (31.7%).
Affordable income
- Income needed to afford rent increased by 2.6% year-over-year in September to $79,144. Since pre-pandemic, the income needed to afford rent has increased by 35.1%.