The U.S. rental market is experiencing cooling demand and slower rent growth. According to housing market platform Zillow, rental rates rose slightly by 0.2% from July to August, reaching $2,063, which is typical for this time of year but lower than in 2021 and 2022. Year-over-year, rent increased by 3.4%, unchanged from July. While rents dropped in eight major cities, they are still higher than last year in most metros. Both single-family and multifamily properties saw slight rent increases. Single-family homes saw rents rise 0.3% to $2,273 month-over-month, while multifamily rents rose to $1,912, up 0.1% from July to August.
As more multi-family new construction is completed and more rentals come on the market, rent growth will likely continue to moderate. Additionally, recent declines in mortgage rates may pull more renters into the sales market, further softening rental demand. But despite these glimmers of hope for renters, multi-family construction starts have fallen to pre-pandemic levels, which could signal that the modest improvements in rent affordability may not last for long.
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