U.S. Rental Market Trends and Forecast in 2024: Will Rent Increase?

Rental market trends are complicated. But knowing the basics can help you make smart housing decisions. Here’s what you need to know in 2024.

Why is rent so high? This is the million-dollar question on everyone’s mind. And thankfully, there are answers.

Whether you’re a digital nomad pondering your next adventure or a retiree eyeing a downsized abode, understanding rental market trends will help you make informed financial decisions about the next place you call home. 

Rent reports are complicated, but this guide is here to help. Here’s everything you need to know about renting in 2024. 

2024 Rental Market Analysis

How’s the rental market right now? According to Zillow’s monthly rent report from March 2024, the housing market is in the midst of very nuanced but significant changes. Here are the basics: 

1. Rent Price Increases Are Returning to Pre-Pandemic Levels

National rent prices rose an average of 0.6% in March compared to the previous month. The small percentage bump sits just below the pre-pandemic seasonal average of 0.7%. This is a sign that month-over-month growth in rental prices is returning to pre-COVID levels. Overall, rent in March 2024 was 3.6% higher than it was in March 2023. 

2. Single-Family Rental Prices Are Getting More Expensive

The average rent for a single-family unit in the U.S. costs $2,183, a 0.7% month-over-month increase. The single-family unit sector has grown by 37.5% since the beginning of 2020, suggesting a transition among older millennials into more spacious homes. 

Single-family rents are up in 49 of the 50 largest metro areas in the U.S. Annual rent hikes were highest in the following cities:

• Cleveland (9.4%)
• Richmond (8.1%)
• St. Louis (7.6%)
• Birmingham (7.5%)
• Cincinnati (7.5%)

3. Multi-Family Rental Prices Aren’t Growing as Quickly

Multi-family rentals briefly outpaced single-family rentals during the onset of the pandemic. But in March, multi-family rental prices had a month-over-month growth rate of 0.5%. In the same 50 metro areas as above, rent increased in just 38 cities compared to the previous year. Prices fell in six cities: 

• Oklahoma City (-0.6%)
• Memphis (-0.4%)
• Cleveland (-0.2%)
• Columbus (-0.1%)
• Austin (-0.1%)

4. Annual Rental Prices Are Increasing on the East Coast

Although rent is on the rise in the 50 largest metro areas, rent prices on the East Coast are rising faster than on the West Coast. Both Washington D.C. and the New York City metro area saw monthly increases of 1%. 

Higher annual rent increases are concentrated east of the Mississippi, including Providence (8.2%), Louisville (6.9%), and Cleveland (6.5%). In contrast, the two cities where rental prices went down were both in Texas — Austin (-3.3%) and San Antonio (-0.6%). These numbers stem from record construction booms in the state. 

5. Landlords Are Offering More Freebies to Tenants

In March, one-third of Zillow rental listings came with concessions, like a free month of rent or complimentary parking. Renter perks are becoming more common, especially in areas where construction booms tilt the supply and demand.

If you spot concessions in your local rental market, it might be a good time to rent. Rents fluctuate seasonally, and perks like these could be an attempt to attract renters during the low season — between October and March. Concessions also hint at more affordability or opportunity to negotiate rent in the future as construction increases and landlords compete for tenants. 

Why Is Rent So High? 

Rent costs have grown quickly since 2020, and there isn’t just one culprit. Here are six driving factors: 

1. Inflation: The cost of living in the U.S. has risen steadily since 2020. Landlords pass off higher bills, like insurance, property taxes, and maintenance, to their tenants. Those rent increases contribute to growing costs, creating cyclical tension between rent versus inflation. 
2. Supply and demand: Shortages in rental properties, and a lack of construction to make up the difference, create competition that heavily favors landlords. 
3. No more rent freezes: In response to lost profits during COVID-19 rent freezes and discounts, landlords often increase prices on new leases and rental agreements. 
4. The nomadic workforce: Remote work opportunities have made it easier for previously urban workers to live in small cities and suburbs. Quick population shifts create sudden demand in regional rental markets that don’t have sufficient housing inventory.
5. Changing lifestyle habits: The U.S. is experiencing record highs of single-person households, driving up the demand for studio and one-bedroom apartments. Plus, a person who lives alone doesn’t have a roommate to split costs, leading to a more expensive lifestyle. 
6. Challenges to homeownership: Between 2000 and 2022, the median home price rose by 162%, and wages have failed to keep up. In November 2023, an American household needed an annual income of $166,600 to purchase a median-priced home — but the average household income is $59,384. Additional barriers to homeownership (like higher mortgage interest rates) keep prospective homebuyers renting for longer, squeezing housing inventory and increasing demand. 

When Will Rent Prices Go Down? 

There’s plenty of data to track how much rent increases per year. But it’s harder to predict when rent prices might decline. Here are four causes of uncertainty in the rental market:

1. Lingering Pandemic Effects

The pandemic created new demand in smaller, regional rental markets. And the shift to solo living created changes in the types of apartments and homes most in demand. A combination of broken supply chains, high business costs, and a labor shortage stimulated a bad recipe for inflation and a slow construction industry. In most areas, supply hasn’t caught up with demand, creating a landlord’s market. 

2. Economic Health

The overarching economy guides the rental market. When the economy is doing well with high employment rates and wage growth, the renter’s ability to afford housing increases, and demand for rentals rises. Higher demand creates higher prices. But a distressed economy, unemployment, and poor personal finances limit renters’ spending power, and the housing market tends to dip to compensate. 

In 2024, the economy is in good shape. The unemployment rate is at a low of 4%, workers’ earnings are outpacing overall inflation, and the labor market is expanding. Although rent costs may make up more monthly personal finances, a healthy economy suggests national rent prices aren’t going down.

3. Basic Supply and Demand

The average rent in your area depends on basic supply and demand principles. A small rental inventory compared to a significant number of potential renters drives up average rent prices, and vice versa. 

Supply and demand can be delicate, changing from city to city and even neighborhood to neighborhood. If you’re planning a move, research the specific area’s construction and other local market trends — not just the city’s average. For example, if you’re moving to a college town, rent climbs at the start of the school year for units closest to universities.

4. Policy Changes

Federal, state, and local regulations have large impacts on rent price trends. Rent stabilization and tenant protection laws can all bring down the cost of your rent. Likewise, inclusionary zoning, tax credits for affordable housing, and public housing programs can all stimulate more affordable markets. 

Research local programs and laws to understand your rights and renting opportunities. And staying up-to-date on evolving housing policies can help you project future moves. 

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Wondering how much rent you can afford? Start with a flexible housing option that comes at a lower cost. Landing’s flexible, fully-furnished rentals are 30% more affordable than a traditional apartment. Become a member today and stop worrying about rent hikes. Landing will never surprise you.