The rental market is undergoing a noticeable shift as rents for both apartments and single-family homes experience a noticeable slowdown.
This is according to an annual report compiled by Rentometer from 2024, which found average single-family rents rose to $2,357 but the pace of rent growth slowed significantly. After increasing 7.1% year-over-year in 2022 and 4% in 2023, rent growth slowed to 0.8% last year, the smallest annual increase in recent years.
“While the beginning of the year signaled another period of strong rent price increases for the single-family rental market, the pace of growth dwindled as the year progressed, ending in negative territory during the last quarter with rents dropping by 0.21% compared to the same period in 2023.”
High vacancy rates and pricing pressure in the apartment market driven by a glut of new units are impacting single-family rents, the report noted. Vacancy rates for single-family rentals reached 6% during the third quarter, the highest they have been since early 2018.
Rent growth varied widely by region in the single-family rental market, with the Midwest leading the country with 5.26% growth in rent followed by the Northeast with an increase of 4.84%. Rents in these markets were driven by affordability and steady demand. Market stabilization in the Pacific and Rocky Mountain regions led to more subdued rent growth of 2.12% and 1.75% respectively. Meanwhile, the Southeast had even less with just 0.62% gain. And the Southwest actually saw a slight decline of 0.09%. These high-growth areas are experiencing cooling demand, the report said.
The emerging build-to-rent (BTR) trend in Sun Belt markets has influenced prices as well. Austin, Phoenix, Tampa, St. Petersburg and San Antonio all saw a decline in single-family rents in 2024. New BTR deliveries are expected to decline in 2025, which could lead to renewed price increases.
Among large cities, San Francisco remains the most expensive market for single-family rentals among US cities not including New York City, although rents dropped in 2024. Los Angeles and Irvine also ranked among the most priciest markets, both with average rents above $5,000. Outside of California, Boston and Miami were among the top 10 most expensive, with average rents of $4,161 and $3,996 respectively.
The most affordable large market was Toledo, Ohio, with an average rent of $1,217. Detroit; Wichita, Kansas; and Fort Wayne, Indiana also ranked among the most affordable large cities.
“These disparities highlight the growing divide in the U.S. rental landscape, where residents in coastal markets face heavy rent burdens, while those in Midwest and Southern cities enjoy more manageable living costs,” said the report.
The most expensive mid-sized city was Cambridge, Massachusetts, with average rent at $5,687, while the most affordable midsize city was Jackson, Mississippi, at $1,197. Newport Beach, California, was the most expensive small city with an average rent of $7,316.