After months of declining rents, the U.S. rental market is showing early signs of a shift. According to a new Redfin report, median asking rents across the country rose by 0.4% year-over-year in February, reaching $1,607. This is the first annual increase in six months and the biggest jump in nine months. On a month-over-month basis, rents climbed 0.6%, suggesting that a period of stability might be emerging after a volatile few years.
While the increase is relatively small, this trend indicates that the rental market may be moving away from the rapid declines seen throughout much of 2023. The question now is whether this is the beginning of a more sustained rise or simply a brief pause in the rental price correction.
A Rollercoaster Ride: Understanding the Rental Market’s Shifts
The U.S. rental market has experienced dramatic fluctuations over the past several years. During the height of the pandemic-driven housing boom, rents surged as much as 18% year-over-year in 2021. However, that unsustainable growth was followed by a cooling-off period, with rents declining 4% in 2023 as rental supply increased and demand softened.
The modest increase in February suggests that the market is now stabilizing. Redfin’s Senior Economist, Sheharyar Bokhari, commented on the shift:
“The era of big rent declines is over for most of the country. With demand and supply roughly balanced, renters probably won’t get much more relief in the form of falling prices.”
However, he also cautioned that a slowdown in apartment construction could lead to potential supply constraints in the coming year. If new rental developments don’t keep pace with demand, landlords could gain more leverage to increase rents, making it harder for renters to find affordable options.
Regional Variations: Some Cities See Declines, Others See Sharp Increases
While the national rental market has seen a slight increase, not all regions are experiencing the same trend. Some cities are still seeing declines, while others are facing double-digit rent hikes.
Top Cities Where Rents Declined in February:
Some markets continue to experience rental price drops, especially in areas where demand has softened or new supply has increased.
- Austin, TX → -9.4% (Median rent: $1,404)
- Salt Lake City, UT → -7.8%
- Jacksonville, FL → -6.7%
- Seattle, WA → -6.2%
- Las Vegas, NV → -5.8%
These cities saw significant rent decreases over the past year, likely due to a combination of increased rental inventory and cooling demand. Austin, for example, experienced a massive apartment construction boom, leading to more supply and greater competition among landlords, which is driving rents down.
Top Cities Where Rents Increased in February:
On the flip side, some cities have seen substantial rent hikes, far outpacing the national average.
- Cincinnati, OH → +15.3%
- Providence, RI → +12.4%
- Baltimore, MD → +9.6%
- Minneapolis, MN → +7.1%
- New York City, NY → +6.4%
In cities like Cincinnati and Providence, demand is growing faster than new housing supply, driving up prices. New York City’s rental market also continues to trend upward, reflecting strong demand for urban housing despite overall market corrections in other regions.
Apartment Sizes: Who’s Paying More?
Not all rental types are seeing the same price trends. The February data shows that smaller apartments have experienced price increases, while larger rentals have actually become more affordable.
- Studios & One-Bedrooms → +0.4% (Now at $1,467)
- Two-Bedrooms → +0.6% (Now at $1,689)
- Three or More Bedrooms → -0.5% (Now at $1,990)
This shift suggests that young professionals, singles, and small households are still driving demand for compact urban rentals, while families searching for larger homes may have more negotiating power as supply in that segment remains strong.
What’s Driving the Shift?
Several factors are influencing the recent rental market changes:
- Apartment Construction Boom in Recent Years
- A surge in multifamily housing developments over the past two years has increased rental supply, which helped stabilize prices in 2023.
- Declining Home Affordability
- As mortgage rates remain high, many potential homebuyers are delaying purchases and staying in rentals longer, contributing to steady demand.
- Job Market & Migration Trends
- Cities with growing job opportunities and population influx (e.g., Cincinnati, Baltimore) are seeing rent increases, while areas with slower job growth or oversupply (e.g., Austin, Jacksonville) are seeing declines.
Will Rents Continue Rising in 2025?
The big question is whether the modest rent increase in February is the start of a sustained upward trend or just a temporary adjustment.
Redfin’s report highlights a key concern: apartment construction is slowing down. The recent wave of new rental units helped ease price pressures, but if fewer new apartments are built in the coming years, landlords may regain pricing power, leading to another period of rent hikes.
Additionally, renter-friendly perks—such as discounted rent, free parking, or move-in incentives—may start to disappear as landlords gain confidence in raising prices.
Key Takeaways for Renters & Property Managers
- Renters: Now may be a good time to lock in a lease in cities where prices are still declining. If you’re in a market where rents are rising, act quickly before further increases.
- Property Managers & Landlords: Pay attention to regional demand trends and new construction activity to gauge future pricing strategies. In high-growth cities, landlords may soon be able to raise rents again.
Final Thoughts
February’s rent increase marks a turning point for the U.S. rental market. While it’s too early to tell if this trend will continue, it’s clear that the dramatic rent drops of 2023 are coming to an end. Renters should stay informed and consider regional trends when making housing decisions.
For more details, check out the full Redfin report here:
Redfin Report: U.S. Asking Rents Rose 0.4% in February—A Small Increase, But the First in 6 Months