Rent prices dropped for the 24th consecutive month in July, completing two years of overall declines in the U.S. rental market.
Multifamily construction is falling, with completions down 38% year-over-year and permitting tumbling in key cities amid rising material costs and new tariffs.
Expert warnings point to potential future rental shortages, threatening today’s renter-friendly conditions.
While home prices have continued to rise in most metro areas, rents have eased a bit. Realtor.com’s Monthly Rent Report for July showed the national average rent fell for the 24th straight month.
In July, the median asking rent for 0–2 bedroom properties in the country’s 50 largest metro areas slipped to $1,712, representing a drop of $43 from July 2024. Although rents remain $254 above pre-pandemic levels, they are now $47 less than the peak seen in August 2022.
“Rents have now declined for two full years, giving renters more leverage and financial breathing room than they've had in some time,” said Danielle Hale, chief economist at Realtor.com.
However, these gains could be short-lived. Developers nationwide are scaling back construction dramatically.
In June, the number of completed multifamily units plunged by 38.1% year-over-year, from a seasonally adjusted annual rate of 656,000 in June 2024 to just 406,000. Rising construction costs, lower profits due to falling rents, and newly announced tariffs on imported steel and aluminum are squeezing builder margins, slowing activity across all U.S. regions. The Midwest saw completions fall by a staggering 55.7%, while the other regions logged smaller, double-digit declines.
In market after market, apartment construction is declining, New, higher tariffs on steel and aluminum, enacted in June, are widely expected to exacerbate the slowdown.
Tariffs could be a game-changer
“Developers are pulling back in key markets, and construction headwinds, especially tariffs on steel, lumber and aluminum—could create a shortfall in new rental supply down the line,” said Hale. “If construction pullbacks continue, today’s renter-friendly market could give way to a tighter, more competitive landscape.”
But for the time being, renters are catching a break. In July, the average rents were:
Studios: Median rent was $1,428, down 1.4% year-over-year.
1-bedrooms: Median rent $1,590, down 2.8% year-over-year.
2-bedrooms: Median rent $1,898, down 2.3% year-over-year.
While renters are benefiting from improved affordability and slower seasonal rent growth, experts warn that future supply constraints could tilt the market back in favor of landlords, especially as the pipeline for new apartments shrinks under tougher economic and trade conditions.