U.S. Rent Growth Trends Shaping 2025

Why U.S. Rent Growth Trends Matter for Investors

The U.S. rental market is shifting, with the Northeast and Midwest leading in rent growth, while Sunbelt cities struggle with oversupply. Investors, property owners, and renters alike need to understand these regional rent growth trends to make informed decisions.

In markets like New York City, New Jersey, Columbus, Kansas City, and Chicago, low housing supply and strong demand are pushing rents higher. Meanwhile, in Austin, Charlotte, Miami, and other high-development cities, a surge in new apartment construction is leading to declining rents and prolonged lease-up periods.

This multifamily market analysis will break down the top rent growth cities, the impact of oversupply, and the outlook for 2025, helping investors evaluate where to focus their real estate strategies for the best returns.

 

Northeast & Midwest See Highest Rent Growth While Oversupply Hits Sunbelt Markets

Understanding U.S. Rent Growth Trends

The Northeast and Midwest are experiencing the highest rent growth in the country, driven by a favorable supply and demand balance for property owners. Limited new construction in key markets has pushed rents upward, while areas with high development activity are facing rent declines due to oversupply.

Top Cities for Rent Growth

The five leading markets for rent increases are:

  • New York City+5.4%
  • New Jersey+3.8%
  • Columbus, Ohio+3.6%
  • Kansas City, MO+3.3%
  • Chicago, IL+3.1%

Among these cities, Columbus is unique—while it has seen a surge in new apartment construction, job growth and demand continue to push rents higher. In contrast, New York, New Jersey, Kansas City, and Chicago are seeing rent growth due to limited new supply, which is driving up prices.

Why Affordability Supports Rent Growth Trends

A key factor sustaining rent increases in these areas is affordability. While Manhattan’s average rent is $4,800 per month, the rent-to-income ratio remains relatively low for high-income earners.

Other cities like Kansas City offer significant affordability advantages, with an average rent of $1,165 per month—7% lower than the national average. With a median household income of $78,000, Kansas City renters have room for further rent growth before affordability becomes a constraint.

Sunbelt Cities Face Rent Declines Due to Oversupply

While the Northeast and Midwest benefit from constrained supply, Sunbelt cities are facing the opposite problem—overbuilding is driving rents down.

Cities with the Largest Rent Declines:

  • Austin, TX-6.2% due to overbuilding
  • Charlotte, NC37K new apartments under construction
  • Miami, FL28K units in development
  • Salt Lake City, UT21K units in progress
  • Raleigh-Durham, NC30K apartments set for completion

Austin, TX, is the most extreme case, with 65,000 apartments under construction, set to increase the city’s apartment stock by 22% in the next two years. At current absorption rates, it will take years to fill these units, creating ongoing rental price pressure.

Similar oversupply issues are developing in Charlotte, Miami, Salt Lake City, and Raleigh-Durham, where apartment stock will increase by 17% in the coming years. Until demand catches up, rents in these markets will continue to struggle.

Future Outlook: When Will Rent Growth Stabilize?

Projected supply and demand trends are a reliable indicator of where rents and occupancy rates will head over the next few years. Cities with overbuilt rental markets will continue to experience flat or declining rents until absorption catches up.

However, construction starts are already slowing, which means that in areas where population growth remains strong, the oversupply will eventually be absorbed. By mid-2025, markets that are currently seeing rent stagnationwill likely begin to recover, with rents climbing again.

Key Takeaways for Investors

When evaluating new markets for multifamily investment, it’s crucial to analyze supply pipeline data, construction trends, and population growth. Investing in areas with limited new supply and sustainable demand growth can lead to higher long-term rent appreciation.

Underwriting must reflect accurate supply data, ensuring that rental growth projections align with market fundamentals. A miscalculation in supply-demand dynamics can lead to lower-than-expected returns and prolonged periods of rent stagnation.

Image of Multifamily Property Toolbook by Rod Khleif, top multifamily real estate coach

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