Rental Market Trends in the U.S. — Rent Growth Finally Slows

Asking rents increased 0.3% from July to August, according to Zillow’s rental report for August.
Anna Helhoski
By Anna Helhoski 
Edited by Rick VanderKnyff

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Updated Sept. 13 with the latest Bureau of Labor Statistics' consumer price index data for shelter and rent.

More than 35% of households in the U.S. rent homes, according to 2017-2021 data from the U.S. Census Bureau

U.S. Census Bureau. QuickFacts, United States. Accessed Feb 13, 2023.
. Over the last few years it’s become more expensive than ever to rent. But price growth is continuing to slow down since hitting an annual peak of 16% in Feb. 2022.

Typical asking rents in the U.S. are now $2,052, on average, representing a 3.3% increase compared with the same time last year, according to the real estate website Zillow’s rental report for August released on Sept. 8.

How did rent get so expensive?

The fast growth of rent costs since 2020 derives from a variety of factors, including: 

Inflation. Higher costs across the board mean landlords pass on higher costs (such as rising wages for maintenance workers or repair costs) to renters. Higher rent costs contribute to inflation and the cycle repeats.  

Lack of inventory. There is a shortage of vacant rental properties in general, and of affordable ones in particular. 

Expired rent freezes and discounts. Landlords are making up for pandemic-era rent freezes and steep discounts in urban areas by hiking prices on new units and lease renewals. 

A shifting workforce. As the pandemic increased the popularity of remote work, deep-pocketed renters sought larger homes in areas that had been previously relatively low-cost. This migration increased rents in suburban areas more than it lowered them in urban ones, yielding a net increase in rents.  

More demand to live alone. Prospective renters are increasingly looking for studio and one-bedroom apartments, driving up demand for available housing, according to a November 2022 report from the real estate website StreetEasy. 

Barriers to homeownership. Prospective homeowners remain renters for longer as they face high demand and low inventory of existing homes, rising mortgage interest rates, as well as supply chain disruptions that have made it more expensive and difficult to construct new homes. 

As mortgage rates rose over the past year, housing prices cooled faster than rents, which are finally rising at a slower pace than in the last three years.

In 2022, a promising development began: Multifamily construction in 2022 reached a 50-year high nationwide, according to the rental listing service RentCafe. A new supply of housing is likely to bring down overall rent growth. And since many cities require inclusionary housing — meaning a portion of new housing must be affordable — new construction also means new affordable housing.

On Jan. 25, the Biden administration proposed a “Blueprint for a Renters Bill of Rights,” a new set of federal actions aimed at promoting rental affordability that also include guidelines to strengthen tenant protections

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Is rent going up or down?

Rent price increases have slowed down overall and are slightly lower than pre-pandemic rates, according to the latest data from the real estate website Zillow’s rental report for August 2023. Year-over-year rent growth ranged between 4.0% and 4.2% in 2019, the report says.

The price of asking rents increased 0.3% from July to August, the report shows. It’s slightly lower than the previous month-to-month increase of 0.5% from June to July.

The August month-to-month growth rate is still slightly higher than the 0.2% typical monthly increase averaged over past Augusts from 2015 to 2019. But when compared with August in both 2021 (1.8%) and 2022 (0.6%), the pace of growth in July 2023 is still slower.

The following are the latest increases and declines from Zillow’s analysis of housing data in 50 cities:

Cities with the highest rent increases


  • Buffalo, N.Y. (+0.97%).

  • Cleveland, Ohio (+0.75%).

  • Birmingham, Ala. (+0.75%).

  • San Diego (+0.73%).

  • Milwaukee (+0.69%).


  • Hartford, Conn. (+7.3%).

  • Providence, R.I. (+7.2%).

  • Buffalo, N.Y. (+6.3%).

  • Chicago (+6.0%).

  • Boston (+5.8%).

Cities with the lowest rent increases


  • Austin, Texas (-0.63%).

  • Las Vegas (-0.13%).

  • Portland, Ore. (-0.11%).

  • San Antonio, Texas (-0.10%).

  • San Francisco (-0.04%).


  • Austin, Texas (-2.5%).

  • Las Vegas (-2.1%).

  • San Jose (+0.1%).

  • Phoenix (+0.2%).

  • Portland, Ore. (+0.2%).

  • San Francisco (+0.2%).

  • San Antonio, Texas (-0.2%).

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Rent vs. inflation 

Rent is a major contributor to inflation and the cost of rent is also impacted by inflation. The price index for shelter, which includes rent, makes up the biggest portion (34%) of the consumer price index, a proxy for inflation

U.S. Bureau of Labor Statistics. Measuring Price Change in the CPI: Rent and Rental Equivalence. Accessed Feb 13, 2023.

The latest data from the Bureau of Labor Statistics released on Sept. 13 shows that in August shelter continued a 40 month increase. For August, shelter, which includes rent, was the second largest contributing factor for the overall inflation increase — second only to gasoline. It is the largest contributing factor for the core inflation increase, which excludes food and energy.

Over a 12-month period ending in August, shelter was up 7.3%. For rent, specifically, the month-over-month increase from July to August 9 (0.3%) was one percentage point lower than the June to July increase. In general, the rent index has remained relatively flat compared to the previous months.

But there’s also a lag in how rent data is reflected in the CPI, which means we won’t have a clear picture of housing for the bulk of 2022 until closer to the end of 2023. The lag is primarily due to the cycle of renewals for leases. Since most leases last around a year, a renter’s costs will stay the same all year long. It’s only when the lease ends that a better understanding of the rental market emerges. 

The rent-specific portion of CPI has been outpacing overall inflation for decades and most sharply began to diverge in the mid-to-late 2010s. 

Who is most likely to rent?

Single people are more likely to rent than couples, regardless of whether they have children, according to a 2022 rental housing report from Harvard University

Joint Center for Housing Studies of Harvard University. America's Rental Housing 2022. Accessed Feb 13, 2023.
. Hispanic, Black and Asian residents are more likely to rent than own homes when compared with white residents. Those with incomes at or below $74,999 are more likely to rent than own compared with those with incomes $75,000 and over. 

Despite soaring rents, it’s still less expensive to rent than to buy. The typical rent for an average three-bedroom place is still more affordable than owning a similar-sized home in 95% of the 222 U.S. counties analyzed by ATTOM, a land and property real estate data curator, in its 2023 Rental Affordability Report.

The generation of adults most likely to rent is Gen Z with 74% of the cohort renting their homes, according to a March 29 data analysis by RentCafe, an apartment listing service. That's a pretty recent development since Millennial home buyers only began to outweigh renters in the cohort as of 2022, the data shows. The analysis found 51.5% of millennials now own their own home. The amount of millennial homeowners increased 28% from 2019 to 2022. But baby boomers are still the dominant generation owning their own homes, representing 40% of all homeowners in the U.S.

Rent vs. income

Generally, households should be spending no more than 30% of their gross income on rent, according to the NYU Furman Center

NYU Furman Center. State of Renters and Their Homes. Accessed Feb 13, 2023.

That means if a household earns the U.S. median income — $70,784 annually, or $5,899 per month, according to the U.S. Census Bureau — when applying the 30% rule, the goal would be to spend no more than $1,770 per month on rent

U.S. Census Bureau. Income in the United States: 2021. Accessed Feb 13, 2023.

Spending 30% of your income on rent means a household is “moderately rent burdened,” but spending 50% or more means a household is “severely rent burdened” by federal standards

NYU Furman Center. State of Renters and Their Homes. Accessed Feb 13, 2023.
. Those with the highest rent burden are disproportionately seniors, low-income, immigrants and racial or ethnic minorities, according to a 2015 Zillow analysis of U.S. Census Bureau data. Severely-burdened renters are also more likely to have long commutes via public transit and lack cars. Children are also often present in homes with high rent burdens. 

Previous rent reports:

National vacancy rates: Homeowner vs. rental

The rental vacancy rate during the first three months of 2023 (6.4%) increased from the fourth quarter of 2022 (5.8%), and is just slightly lower compared with a year ago (5.8%).

Homeownership in the first quarter of 2023 meanwhile, changed little (66%) from the fourth quarter of 2022 (65.9%) or from the first quarter of 2022 (65.4%)