Single-family rentals (SFR) are fueling rent growth across the country as homeownership remains challenging due to significant upfront costs and unpredictable mortgage rates.
The asking rent for a typical single-family home was $2,174 in December, according to Zillow data. That’s up 4.4% from last year and 40.6% over the past five years. By comparison, multifamily rents grew just 2.4% from last year and 26.2% over the past five years, according to Zillow’s data.
“As of December, single-family rents were 20% higher than multifamily rents, which is the greatest disparity between these two subsets since Zillow began tracking this data in 2018,” the report said.
SFR rents fell each month in 20 major metro areas in December. The largest monthly decreases in SFR rents were in Salt Lake City, Boston, Buffalo, Denver and Virginia Beach. Despite this performance, SFR rents rose year-to-year in December in all of the 50 largest metro areas, led by Hartford, Connecticut; St. Louis; Cleveland; Chicago; and Indianapolis.
Pittsburgh has made notable strides in the SFR market while construction has not kept pace in much of the country, said Zillow.
“Over the past five years, single-family construction has boomed in Pittsburgh, which softened the imbalance between single-family and multifamily rent prices,” said Zillow. As of December, single-family rents were just 14.2% higher than multifamily rents in Pittsburgh, the report said.
High vacancy rates and pricing pressure in the apartment market driven by a glut of new units are impacting single-family rents, according to a recent Rentometer rental report. Vacancy rates for single-family rentals reached 6% during the third quarter, the highest they have been since early 2018, the report said. Rentometer pegged the average single-family rent at $2,357.
Concessions have given renters a small reprieve in growing rents, with two in five rental listings offering a concession in December, according to Zillow’s data. The share of rentals with concessions rose in 48 major markets year-over-year in 2024, with the largest increases in Denver, Louisville, Raleigh, Indianapolis and Nashville.
“As we enter 2025, it’s fair to say that concessions in the multifamily market are here to stay,” said Zillow. “Whether single-family rent growth will continue to rise at a rapid pace ultimately depends on where mortgage rates go, but with limited construction of single-family rentals on the horizon, this segment of the market will likely stay tight.”