Rent prices decreased in July for the 24th consecutive month, according to Realtor.com’s Monthly Rent Report. In addition, a growing pullback in multifamily development due to rising construction costs and new tariffs on key building materials could mean trouble for future supply.
The median asking rent for studios to two-bedrooms in the 50 largest metros decreased $43 year over year to $1,712 last month. Realtor.com noted that while monthly rent growth typically follows a seasonal pattern, it has consistently lagged behind last year’s pace, indicating a cooler market. However, rent prices are still $254, or 17.4%, higher than their pre-pandemic levels, but $47, or -2.7%, below the August 2022 peak.
“Rents have now declined for two full years, giving renters more leverage and financial breathing room than they’ve had in some time,” said Realtor.com chief economist Danielle Hale. “But there are early signs that relief may not last forever. 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.”
Multifamily completions for buildings with two or more units dropped 38.1% year over year in June—from a seasonally adjusted annual rate of 656,000 units in June 2024 to 406,000. According to Realtor.com, this drop signifies the challenges developers are navigating, such as elevated construction costs, shrinking profit margins, and newly expanded tariffs.
Regionally, the Midwest saw the steepest annual drop in completions in June, -55.7%, followed by the South, -33.5%; Northeast, -33%; and West, -28.9%.
At a market look, permits for multifamily units dropped -54.9% in Orlando, Florida, from the first to second quarter. Philadelphia and San Antonio experienced their first second quarter permitting dips in three years, while Charlotte, North Carolina, and Las Vegas saw their largest quarterly permitting declines since the second quarter of 2022.
“If construction pullbacks continue, today’s renter-friendly market could give way to a tighter, more competitive landscape,” added Hale. “It’s a trend we’ll be watching closely, especially in markets that had previously led the way in multifamily developments.”
