The rental market is experiencing a significant shift. After years of rapid increases that strained budgets across the country, rent growth for single-family homes has slowed to its lowest point in over a decade and a half.
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The Numbers Tell the Story
According to recent data from analytics firm Cotality, single-family home rents increased by just 1.4% in August compared to the previous year. This marks a sharp deceleration from July’s 2.3% growth rate and falls well below last year’s 3% average gain. In fact, this represents the smallest year-over-year increase recorded in 15 years.
This cooling trend has been consistent across all price segments throughout the second half of the year, a notable shift from the strengthening rental market we saw in early 2024.
Regional Variations: A Tale of Different Cities
While the national picture shows slowing growth, local markets are telling very different stories:
Strong Performers:
Markets Under Pressure: Dallas stands out with a 0.6% decline in rent growth, the steepest drop in the nation. The city’s rental market has been impacted by a wave of new multifamily apartment developments, creating a supply glut that’s putting downward pressure on prices.
The Luxury vs. Budget Divide
Even within the slowdown, there’s a clear hierarchy. High-end rental properties are weathering the shift better, with 1.6% annual growth in August. Meanwhile, lower-priced rentals saw more modest gains of 1.1%. While both segments are growing, these increases pale in comparison to last year’s stronger performance.
The Apartment Story: Construction Boom Creates Tenant Opportunities
The multifamily apartment sector is experiencing even more pronounced cooling. September data from Apartment List reveals that apartment rents nationally declined 0.8% compared to the previous year, though this represents a slight improvement from August’s steeper drop.
The culprit? A construction surge that has flooded the market with new units. The national multifamily vacancy rate hit a record 7.1% in September, giving renters more negotiating power and choices than they’ve had in years.
What This Means for Your Wallet
The national median monthly rent in September stood at $1,394, down $11 from the same month last year. More significantly, rents are now $48 per month cheaper than their peak in August 2022.
However, it’s important to maintain perspective. While the recent trend is encouraging for renters, typical rent prices remain 22% higher than they were in January 2021. The current cooldown is offering relief, but it’s coming after a period of unprecedented rent increases that fundamentally reset the baseline.
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
Looking Ahead
As Molly Boesel, senior principal economist at Cotality, notes, local conditions continue to play a crucial role. Recovery efforts, housing supply constraints, and regional economic factors can create pockets of strength even as national trends moderate.
For renters, this environment presents the most favorable conditions in years. For landlords and investors, it signals a return to more normal, sustainable growth patterns after an exceptional period of rapid appreciation. The rental market appears to be finding a new equilibrium, one that balances the interests of both property owners and tenants more effectively than the heated conditions of recent years.
To read more about this topic, visit Single-family rent growth hits lowest level in 15 years.
