Single-family rent growth is at a 15-year low

Rents for single-family residential homes rose just 1.4% in August from a year earlier, according to analytics and data firm Cotality, down from the 2.3% annual increase in July. This is also well below the average gain of 3% seen last year and is the smallest increase in 15 years.

Rental growth declined at all price points, continuing a trend that continued in the second half of this year. Rents witnessed an increase in the first half of this year.

However, there were strong differences at the regional level. Chicago saw the highest annual rent growth at 4.7% in August, followed by Los Angeles at 2.8%, Philadelphia at 2.7%, and Washington, D.C., at 2.6%.

Dallas saw a 0.6% decline in rent growth, the lowest in the country. The city has recently seen a significant increase in the number of new multifamily apartments coming to the market, keeping supply higher than demand, Kotality said.

“Atlanta, Philadelphia and Los Angeles continue to show stronger rent growth, with Los Angeles now sitting slightly above its pre-wildfire level as of January,” said Molly Bussell, chief economist at Cotality. “Los Angeles ranks second among the top 10 metro areas in rent growth, suggesting that local conditions such as recovery efforts, limited housing supply and regional economic factors can still influence rental trends even as national price growth moderates.”

Luxury properties performed best, with annual rental growth in August reaching 1.6%. Low-end rental prices are up 1.1% from a year ago, but both are far from last year’s gains.

Multifamily apartment rentals have also cooled. This is largely due to a construction boom in the sector that has delivered a record number of units in the past few years, with more expected this year.

Apartment rental prices nationally fell 0.8% in September from a year earlier, according to a separate report from Apartment List. But this decline was slightly lower than the annual decline in August. Rents have been going more and more negative for five straight months.

The national multifamily vacancy rate was 7.1% in September, a record high for that indicator, according to Apartment List.

“We’re past the peak of the multifamily construction boom, but a healthy supply of new units is still hitting the market, and vacancies are still trending upward,” according to apartment listing researchers.

The national average monthly rent in September was $1,394, down $11 from September 2024, the report said. As rents continue to fall, albeit slowly, rents are now below their last peak in August 2022, or $48 less per month.

“But this slowdown came after a period of record rent growth, and the typical rental price remains 22% higher than its level in January 2021,” the researchers wrote.