The U.S. rental market is going through a major transition. While average national rents have been steadily rising, the reality on the ground looks quite different depending on where you are. Some cities are experiencing price surges reminiscent of the early pandemic boom, while others are finally seeing some relief.
This mixed bag of trends is reshaping how renters, property managers, and policymakers think about housing in 2025. Let’s explore what’s going on — and what it could mean for the future of renting in America.
The National Picture: A Cooling Market Overall
On a national scale, rent growth is slowing. After years of pandemic-fueled price increases, the market is stabilizing in many areas. New data shows that average rent in the U.S. actually fell slightly from December 2023 to December 2024, and year-over-year rent growth has tapered off.
But “average” can be misleading. That national flattening masks some sharp increases — and even sharper declines — depending on the city.
Cities Where Rents Are Still Rising
In places like San Diego, New York City, and San Francisco, rents continue to climb. San Diego saw a year-over-year increase of 5.6%, while New York jumped 6.4%, and San Francisco led the pack with a 10.3% spike in rents.
These markets have a few things in common:
-
Limited Housing Supply: New construction in these areas hasn’t kept up with demand, especially in dense urban centers with restrictive zoning laws.
-
High Mortgage Rates: With interest rates still elevated, many would-be buyers are stuck renting longer, keeping demand high.
-
Strong Job Markets: Tech, finance, and biotech industries continue to draw workers into these cities, fueling the need for more housing.
So, while overall rent growth may have slowed, if you’re trying to rent in one of these high-demand metros, it likely doesn’t feel that way.
Cities Where Rents Are Falling Fast
On the flip side, cities like Austin, Atlanta, and Las Vegas are experiencing rent declines.
Take Austin as an example: between August 2023 and December 2024, rents dropped by 22%. That’s a massive shift for a city that was once at the heart of the post-pandemic relocation boom.
What’s behind the drop?
-
Housing Boom: Austin has benefited from a surge in apartment construction. Developers took advantage of looser zoning rules and a rush of investor interest, leading to a flood of new units hitting the market.
-
Market Correction: Cities like Austin and Las Vegas saw extreme rent hikes in 2021–2022. The current declines are in part a correction from those unsustainable highs.
-
Tenant-Friendly Conditions: In some cities, renters now have more bargaining power. With more options on the market, landlords are being forced to offer lower prices or incentives like free months or reduced deposits.
What’s Driving the Divergence?
So why are some cities feeling relief while others continue to see rent hikes? A few key factors help explain the disparity:
1. Local Housing Policy
Cities that have relaxed zoning laws and streamlined development approvals are seeing more housing come online. This helps balance supply and demand — and brings down costs. Cities with strict zoning and resistance to development often experience the opposite.
2. Migration Patterns
The mass migration that happened during the pandemic — when many people moved from expensive cities to more affordable ones — has slowed. Some workers are returning to offices, and that’s bringing renewed demand to core cities.
3. Interest Rates
With mortgage rates remaining high, many people are priced out of homeownership. That creates more long-term renters, especially in cities where people had once hoped to “move up” and buy a home.
What This Means for Renters, Property Managers, and Policymakers
For renters, this means it’s more important than ever to track your local market. What’s happening nationally might not reflect what you’re facing when it’s time to renew your lease. If you’re flexible, there may be opportunities in cities with falling rents or new construction.
For property managers and landlords, location-specific strategy is key. In some markets, it might be time to offer move-in specials or upgrade units to stay competitive. In others, high demand might support premium pricing or longer lease terms.
And for policymakers, this trend reinforces the importance of building more housing. Cities that are making it easier to develop are starting to see the benefits — not just for affordability, but for long-term market stability.
Final Thoughts
The rental market is no longer moving in one direction. While national averages may suggest calm, under the surface, local markets are pulling in very different directions.
For renters, the key is to stay informed. For the industry, it’s time to adapt. And for cities — especially those still seeing sky-high prices — the lesson is clear: building more housing is the best long-term solution.
Source:
Rents Keep Rising, but Not in Every City – Marketplace