Rents Drop for Third Consecutive Year After 2022 Peak—Report

Newsweek

6 days ago

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
Rents across the U.S. have dropped significantly as affordability in many of America's big cities increased in 2025, according to a report from Realtor.com.
In April 2025, U.S. median rent dropped 1.7 percent year-over-year, for studio to 2-bedroom properties across the United States' 50 largest metropolitan areas.
With a slow but steady decline, median rent is now $60, or 3.4 percent, less than the peak in August 2022.
"The [COVID-19] pandemic took everyone in the real estate market by surprise, from landlords to property builders," Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. "The result was some major cities that saw a surge in new residents moving in didn't have enough housing to meet the demand, sending rents soaring. Now a few years removed, these same metro areas are now dealing with housing availability that more than meets demand and some residents who came during the pandemic returning to their former homes."
Why It Matters
Landlords often increase rent prices because of inflation and changing housing and rental markets. Last year, roughly one-quarter of American renters said they could no longer afford to pay their rent, according to an Intuit Credit Karma study.
Last month's rent-to-income ratio was 23.4 percent for renters earning the typical household income, down from 24.7 percent in April 2024, Realtor.com said.
An apartment building on January 31, 2025, in the borough of Brooklyn, New York City.
An apartment building on January 31, 2025, in the borough of Brooklyn, New York City.
Andrew Lichtenstein/Corbis via Getty Images
What To Know
The U.S. Department of Housing and Urban Development believes that renters and homeowners should be spending no more than 30 percent of their income on housing. Only five of the top 50 U.S. metros still have a ratio higher than 30 percent median household income, including New York, Los Angeles and Boston.
Miami was the least affordable rental market in April, with a median rent for a typical studio to 2-bedroom unit 1.3 times higher than the estimated maximum.
Oklahoma City, Austin, Columbus and Raleigh area metros had some of the most affordable rental ratios at less than 20 percent of income.
Meanwhile, certain rental-unit sizes have seen bigger drops in prices than others.
Studio apartments dropped $27 last month, compared to the same time last year. That's a 1.9 percent decline to $1,410.
What People Are Saying
Nationwide title and escrow expert Alan Chang told Newsweek: "Between planning, funding, permitting and building, establishing new multi-family rentals takes substantial time and energy that has finally caught up to demand from the 2020-21 spike in demand. Limited supplies of rentals caused an increased rent, now that the inventory finally met the demand levels, the cost of rent can start to normalize, making rentals more affordable in some areas."
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "Let's be clear, rent 'falling' is all relative. We're coming off a period of runaway inflation, triggered by the pandemic and the economic chaos that followed. Rents shot up too, and anytime that happens there's usually a pullback."
"We've now seen 21 straight months of year-over-year rent declines across the 50 largest metros. Sounds good, right? But here's the catch, median rent is still only about $60 lower than the peak we saw back in August 2022. So yes, prices are cooling, but they're not exactly inexpensive."
Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: "It's the first time in at least five years that rent feels manageable at 23 percent of median income. Down here, Miami's still brutal at 40 percent, but most markets? They're in this sweet spot where supply might have finally caught up with demand."
What Happens Next
It's likely rent prices will continue on a downward trajectory, and the Midwestern markets are leading the shift.
"It's natural to see rents start to steadily decline in those markets, particularly in the Midwest, and thus bring the national average down from its highs," Beene said.
However, because the progress is slow, Thompson said prices are likely to stay "sticky" and high.
"Those expecting prices to return to pre-pandemic levels are mistaken, and this is the new world by which they live," Thompson said. "It is just going to take a larger portion of one's income to rent in this new environment, and as tariffs start to kick in, I would expect those prices to move higher as landlords recoup their insurance and maintenance cost."