After six consecutive months of decline, U.S. asking rents finally saw an increase in February, rising 0.4% month-over-month. While this may seem like a modest uptick, it marks a potential turning point in the rental market. According to Redfin’s latest report, the median asking rent in the U.S. now stands at $1,937, up from $1,930 in January.
However, despite this slight increase, rents are still down 0.6% compared to February 2024, when the median rent was $1,949. This mixed trend raises important questions: Is the rental market stabilizing? Will rents continue to rise? And what does this mean for renters and property managers alike?
Let’s dive deeper into what’s driving these changes, how different regions are affected, and what the future may hold for the rental market.
Why Are Rents Increasing After Months of Decline?
The past year has been a rollercoaster for the rental market. In December 2024 and January 2025, asking rents declined year-over-year for the first time since the early days of the pandemic. This decline was largely attributed to a boom in rental housing construction, with more apartments becoming available and landlords adjusting prices to remain competitive.
Now, however, the market seems to be shifting. Here are some key factors influencing this turnaround:
1. A Surplus of New Rental Supply is Being Absorbed
Over the past two years, a record number of multi-family units have been under construction. Many of these units started hitting the market in late 2024, leading to rent declines as landlords competed for tenants.
While construction is still high, February’s rent increase suggests that some of this new supply is now being absorbed by the market. This could mean a stabilization in rent prices, rather than steep declines.
2. High Mortgage Rates Are Keeping People in the Rental Market
Would-be homebuyers are staying put in rental properties due to high mortgage rates. With the 30-year fixed mortgage rate hovering above 6%, many renters who might have otherwise purchased homes are delaying their buying decisions.
This increased demand for rentals is putting upward pressure on rent prices, particularly in markets where homeownership is expensive.
3. Inflation and Wages Are Impacting Affordability
Inflation and wage growth continue to affect housing costs. While wage increases have helped some renters afford higher prices, others are struggling to keep up with the cost of living. This has led to a more balanced market, where demand remains strong but rapid rent hikes are less likely.
Where Are Rents Rising the Most?
Not all markets are experiencing the same trends. While some cities are seeing significant rent growth, others continue to experience declines.
Top 3 Metro Areas with the Largest Rent Increases (YoY)
According to Redfin, rents increased year-over-year in 28 of the 50 largest U.S. metro areas. The cities seeing the highest growth include:
- Raleigh, NC → +16.6%
- Cleveland, OH → +15.3%
- Indianapolis, IN → +10.9%
These cities are experiencing strong job market growth and population increases, which are pushing up demand for rental properties.
Top 3 Metro Areas with the Largest Rent Declines (YoY)
On the other hand, some cities are still seeing significant rental declines:
- Austin, TX → -11%
- Chicago, IL → -9.2%
- New Orleans, LA → -5.2%
Markets like Austin and Chicago have seen a surge in new apartment construction, leading to lower rents as landlords compete for tenants. In New Orleans, a slower job market recovery has kept rental demand relatively weak.
What This Means for Renters and Property Owners
For Renters: A Mixed Outlook
If you’re a renter, you might be wondering whether now is the right time to sign a lease or renegotiate your rent. Here’s what you should consider:
Good News:
- Rents are still lower than they were a year ago in many cities.
- More apartment options are available due to ongoing construction.
- Some landlords may still be offering incentives (e.g., free months of rent, lower deposits) to attract tenants.
Challenges:
- The recent 0.4% increase suggests rents may have bottomed out, meaning future declines are less likely.
- In competitive markets, landlords may start raising rents as demand picks up.
Tip: If you’re in a city where rents are still declining, now may be the perfect time to lock in a lease before prices start increasing.
For Property Owners & Landlords: Time to Adapt
For landlords and property managers, the February rent increase is a positive sign that the market is stabilizing. However, with new rental supply still coming online, landlords need to stay competitive.
Here’s what property owners should consider:
Opportunities:
- The rental market isn’t crashing—demand remains strong, especially in markets where homeownership is unaffordable.
- If you’re in high-growth areas like Raleigh or Cleveland, you can potentially increase rents without losing tenants.
Challenges:
- Cities with high new construction levels may still see rental price pressure.
- Affordability concerns could limit how much landlords can raise rents.
Tip: Offering perks like move-in incentives, flexible lease terms, or minor upgrades can help retain tenants and reduce vacancies.
What’s Next for the Rental Market?
While February’s rent increase suggests a potential stabilization, most experts—including Redfin’s Chief Economist, Daryl Fairweather—expect rent growth to remain modest in the coming months.
With more apartments set to hit the market in 2025, renters in high-supply cities may still have the upper hand when negotiating leases. On the other hand, landlords in high-demand areas could see opportunities for steady rent increases.
Key Takeaways
- Asking rents increased 0.4% in February, the first rise in six months.
- Year-over-year, rents are still down 0.6%.
- Raleigh, Cleveland, and Indianapolis are seeing the largest rent increases.
- Austin, Chicago, and New Orleans continue to experience declining rents.
- More rental supply is entering the market, which could keep rent growth slow.
Whether you’re a renter looking for a deal or a landlord adjusting to the market, staying informed on these trends can help you make better financial decisions in the months ahead.
Source: Redfin Report: U.S. Asking Rents Rose 0.4% in February—A Small Increase, But the First in 6 Months