After years of explosive growth, the rental market is recalibrating. Rents nationwide increased by 1.9% in February compared to the same month last year. Since December 2020, the annual growth rate has been the smallest. The Zillow Observed Rent Index (ZORI) indicates that the average asking rent is currently $1,895.
Growing supply is the driving force for the moderation. Multifamily rent growth has reduced to 1.4% annually from roughly 16% during the height of the 2022 rental craze due to a surge in apartment development, which has also increased vacancy rates.
The rental supply is also influenced by cooling circumstances in the for-sale market. A nearly unprecedented number of homeowners who were unable to sell their homes opted to rent them out in the latter part of last year. Single-family homes are being added to the rental pool by these “accidental landlords.” In February, single-family rents increased by 2.6% year over year, the weakest yearly growth since 2015 according to Zillow’s figures. In contrast, before to the pandemic, single-family rent increase averaged roughly 4.4% every year.
Affordability Pressures Concerning U.S. Consumers
As more supply becomes available, renters are gaining leverage, and this trend is anticipated to continue. Property managers are competing more fiercely on price and incentives as apartment construction grows and more single-family houses enter the rental market.
Affordability for new tenants has slightly improved over the past year due to salaries growing slightly faster than rents. Rent now accounts for 26.3% of the income of a renter household with the median household income, a modest decrease from a year ago. Even still, a household must make over $76,000 a year to comfortably afford the average rental, which is 35% more than what was needed prior to the pandemic.
The good news for tenants is that having more rental options has increased their negotiating leverage and slowed the rate of rent increases. 39.2% of Zillow postings provide incentives like free rent or waived fees, demonstrating the continued prevalence of concessions. Even if that percentage has decreased somewhat from a year ago, it is still high by historical norms. In comparison to the previous month, the rate of annual rent increases slowed in 34 areas in February.
Eight of the 50 biggest U.S. areas had a year-over-year decline in rent; these markets are usually those that have taken in significant amounts of new supply. Austin (-2.4%), San Antonio (-1.6%), Tampa (-1.4%), and Denver (-1%) are among them. Stronger gains are being reported by certain tighter markets. With rent increases of 6.3% year over year, San Francisco leads, followed by Virginia Beach (5.7%) and Chicago (5.5%).
Among the 50 largest markets, Austin, San Antonio, Jacksonville, and Tampa had the highest vacancy rates at the end of 2025. Hartford, Boston, Denver, San Jose, and Providence had the lowest vacancy rates.
As of December 2026, single-family rents are expected to increase by 1.8% yearly, while multifamily rents are expected to increase by 0.9%. Rent growth is expected to be modest in 2026. Although local circumstances will differ, increased vacancy, ongoing apartment completions, and an increase in single-family homes entering the rental market are anticipated to control national rent rise.
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