US rents rise 2.3% in July, fastest annual pace in over a year
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The US median asking rent rose 2.3% in July to nearly $2,000 a month, the biggest annual jump in over a year, according to Zillow. Higher single-family home rents drove much of the gain, while apartment rents also climbed as a construction boom fades. The increase remains below broader inflation and typical wage gains, but landlords are regaining pricing power.
Key Facts
- The US median asking rent rose 2.3% in July to nearly $2,000 a month, the largest annual increase in over a year, according to Zillow.
- Multifamily construction permits fell 33% in July from July 2022, signaling a sharp pullback in apartment building.
- The nationwide apartment vacancy rate stands at 7.1%, historically elevated but beginning to decline for the first time since 2021, according to Apartment List.
- Cities like San Francisco, San Jose, and New York are seeing the fastest rent acceleration, while some Sun Belt markets still post year-over-year declines.
- Mortgage rates at 6.7% and near-record home prices are keeping more would-be buyers in the rental market, boosting demand.
Rent Growth Drivers
Higher single-family home rents accounted for much of the July increase, according to Zillow. Apartment rents are also rising as the construction boom that kept them flat or falling in recent years begins to fade. Builders pulled back sharply after higher interest rates and oversupply caused rents to fall in Nashville, Denver, and Austin. Multifamily construction permits dropped 33% in July from July 2022, reducing future supply. The apartment vacancy rate of 7.1% is beginning to tick down for the first time since 2021, according to Apartment List.
Market Divergence
Rents are accelerating fastest in San Francisco, San Jose, and New York, which largely sat out the recent construction wave. Some Sun Belt cities that built heavily are still seeing rents fall year over year, though less aggressively than before. Rob Warnock, lead economic researcher at Apartment List, said the market is on a trajectory toward better supply-demand balance. Mischa Fisher, chief economist at Zillow, said the exceptionally favorable window for renters has been fading.
Homebuying Pressure
With mortgage rates at 6.7% and home prices near all-time highs, more would-be homebuyers are renting for longer. Crystal Chen, director of communications at rental marketplace Zumper, said more people staying in rentals continues to drive up overall demand. Many apartment buildings still offer concessions like free months to new lessees, but landlord pricing power is increasing.
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US rents rise 2.3% in July, fastest annual pace in over a year
