The rental market just delivered its clearest signal yet: we’re now four years into a sustained pricing correction. January 2026’s national median rent dropped to $1,353, down 1.4% year-over-year and marking the lowest January figure since 2022. More critically, the national vacancy rate hit 7.3%, a record high since tracking began in 2017.
Here’s what most coverage misses: vacancy is your real enemy, not rent softness.
The Math Everyone Ignores
Properties are sitting vacant an average of 41 days before leasing. That’s four days longer than last January. For a unit at that $1,353 median rent, each day of vacancy costs you roughly $45 in lost revenue you’ll never recover. Multiply that by 41 days and you’re looking at $1,845 in direct losses before you even factor in utilities, marketing costs, or the 15-20% probability of tenant-caused damage during turnover.
Yet we still see landlords holding firm on asking rents that the market has clearly rejected. This is pride masquerading as strategy.
Four Years of Correction: The Supply Story
Rents are now 6.2% below their summer 2022 peak. Read that again: we’ve had nearly four years of sustained decline from the post-pandemic highs, and the market still hasn’t found equilibrium.
The construction wave that began in 2021-2022 has technically peaked, but “peaked” doesn’t mean “stopped.” The pipeline still has substantial inventory working through lease-up, particularly across the South and Mountain West where institutional investors overbuilt based on migration patterns that reversed two years ago.
Austin leads the carnage with rents down 6.3% year-over-year. New Orleans, San Antonio, Tucson, and Denver round out the bottom five. These aren’t temporary blips. These are structural oversupply corrections that prove the institutional players misread demographic trends just as badly as the rest of us.
Where the Market Still Works
The counterpoint: Virginia Beach is seeing 5% rent growth. San Jose and San Francisco are climbing. Chicago and Providence are rising. What do these markets share? Constrained supply meeting relatively stable demand from employment centers that never went on a building spree.
This creates a critical decision point for small landlords: are you competing in an oversupplied market where you need to adjust to reality, or are you in a supply-constrained market where you can maintain pricing power?
The Demand Side Nobody Wants to Discuss
Weaker job markets and slower household formation continue dragging down absorption rates. Translation: fewer people are in a position to move, and those who are moving have more negotiating leverage than they’ve had since early 2020.
This matters because it shifts the tenant quality equation. In tight markets, you could charge premium rents and still attract stable, employed residents. In this environment, premium pricing increasingly means you’re selecting for desperation: people who will stretch their budget beyond prudent limits, creating payment reliability risk six months down the road.
We’d rather see you price 3-5% below market, fill the unit in 14 days instead of 41, and lock in a two-year lease with a quality resident who views the rent as fair value. The net operating income over 24 months crushes what you’ll achieve by holding out for an extra $75/month while bleeding vacancy costs.
Important Steps to Rent Your Home Out from A to Z
Step by step checklist for getting a home rented, and link to the full property management guide
1 Consider strengths and weaknesses for your home and location and consider special strategies to utilize them. Is it a college area? If so, you’ll likely handle a lot differently from low income, or a suburb
2 Get the property in show-ready condition by handling repairs, but also low-cost aesthetic fixes like spray painting rusted AC grates, and other things that really stand out. A sure way to attract sub-par tenants and repel the rest is to show a home with unrepaired issues
3 Decide whether you’re going to allow pets or not. Before you decide, know that for most landlords it’s the single best thing you can do to increase your “bottom line” profit over the long term. More on this subject here
4 Set a rental rate that will balance a minor amount of time on market hassle, with monthly rate. Whether in the form of owner-occupied showings, stress, or vacancy. Most owners fail to properly account for these subtle but real costs, especially vacancy. Vacant homes are much more costly than most account for. We can provide a free rental rate estimate compiled by people, not an algorithm, here
What This Means for Your 2026 Strategy
The rental market is bifurcating. Supply-constrained metros on the coasts and Midwest can maintain pricing discipline. Overbuilt Sun Belt and Mountain West markets need to accept that 2022 pricing is gone and isn’t coming back anytime soon.
The national vacancy rate will likely stay elevated through summer. The traditional July 4th inflection point may provide temporary relief, but unless job market conditions materially improve, we’re looking at continued softness through year-end.
Smart landlords are already adapting: offering 6-8 week free rent on 18-month leases (which pencils better than straight discounting), improving curb appeal to compete with institutional Class A properties, and most importantly, dropping asking rents to market-clearing levels instead of letting units sit empty while they “wait for the right tenant.”
That right tenant is touring your competitor’s property right now, the one who priced their unit at actual market rent instead of what they wish the market would pay.
To read more about this topic, visit Apartment rents just dropped to the lowest level in 4 years.
