Apartment Rent Hikes Begin to Slow

Several factors have made finances for would-be home purchasers in the U.S. very challenging in recent years:

1) To begin with, interest rates, through mid-2025, have been stubbornly high. This makes monthly home mortgages beyond the reach of many buyers, even in two-income families.

2) Home asking prices have generally been much higher, on average, than they were a few years ago. For new homes, pricing is driven higher by rising construction costs and high lot costs. Meanwhile, owners of existing homes in most markets have been asking steep prices, while those who were lucky enough to get Covid-era low mortgage interest rates (in the 3% to 4% range) are reluctant to sell at all.

3) Monthly home ownership costs have risen significantly, including property taxes, homeowner’s insurance and utility bills.

Consequently, a vast portion of the population is opting to rent rather than buy. Rents soared, and the number of new apartments brought to market grew rapidly as well. The vacancy rate in 2024 was 7.1%. A record breaking 500,000 new apartment units were completed in 2024. Offers including free amenities, lower security deposits and waived fees or a free month’s rent became common in 2024 and 2025.

While these new units increased competition among landlords for new tenants, the national median rent in 2024 (at $1,373) remained about $225 per month higher than in 2021. The fact is, renting remains much more affordable than owning. Owning costs about $1,730 more per month than renting a class B apartment, as of early 2025.

The number of new apartments completed is expected to drop significantly in 2026 and for a few years beyond. New construction costs are high, and both lenders and investors want to see units completed in 2024 and 2025 fully absorbed before many new projects are started.

Internet Research Tip: Apartments

Find out everything you need to know about apartments at the website of the highly regarded National Apartment Association, www.naahq.org. Particularly useful are its archive of historical statistics and its commentary on the rental market.

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