Median Rents See Modest Increases, But Renters Remain Active Amid Tight Supply

The U.S. rental market saw a notable uptick in median asking rents this August, with a year-over-year increase of 2.6%, or $45, bringing the median rent to $1,790. This marks the largest gain since December 2022, and is now only $70 shy of the record high set in the summer of 2022. This rise follows two years of mostly stagnant or declining rent prices, signaling a shift back toward upward pressure on rents.

August also marked the third consecutive month of year-over-year rent increases, indicating that the market may be entering a new phase. In addition to the annual rise, median asking rents also saw a modest 0.3% increase compared to July. This upward momentum is driven by cooling rental supply and sustained demand, which is partly a result of high homeownership costs. As potential buyers remain on the sidelines due to expensive home prices, more renters are staying put or entering the market, further fueling rent increases.

Sheharyar Bokhari, Senior Economist at Redfin, explained, “Apartment construction boomed during the pandemic, but now many of those projects have been completed, and fewer new ones are starting. Builders are slowing down due to high financing costs, increased construction expenses, and reduced investor appetite. With fewer new apartments entering the market, renters are facing fewer options, and landlords are regaining the ability to raise prices.”

New Construction Provides a Temporary Buffer for Renters

The boom in apartment construction during the pandemic served as a crucial buffer for renters, helping to meet rising demand. However, new apartment development has significantly slowed. By July, the number of new apartment units being constructed fell to a seasonally adjusted annual rate of 385,000, a stark 45.4% decrease from the peak of 705,000 in August 2024. Apartment building permits have also taken a dive, with a drop of over 20% since the pandemic’s construction boom, according to Redfin’s latest survey.

While renters in some regions have been able to negotiate perks such as free parking or lower rents, these concessions are becoming less common as supply tightens. As new apartment developments slow down, fewer incentives are available for renters to take advantage of.

Regional Rent Trends: Some Cities See Significant Increases

Among the 42 major core-based statistical areas (CBSAs) analyzed by Redfin, Chicago saw the largest year-over-year increase in median asking rent, up 10.7% to $2,275 in August. This was followed closely by San Jose, CA, which saw a 10.6% increase, and Philadelphia, with a 9.9% rise. Pittsburgh also saw rents rise by 9.8%, while Washington, D.C. experienced an 8.7% increase.

However, not all metros saw rent increases. Austin, TX, experienced a 3.1% decline in rents, followed by Louisville, KY, with a 2.4% decrease, and Jacksonville, FL, which saw a 1.9% drop. These metros stand in contrast to the broader national trend of rising rents.

Rents for Smaller Apartments on the Rise

The largest increases were seen in smaller apartments, where demand has remained strong. For apartments with 0-1 bedrooms, the median asking rent rose 4.4% year-over-year to $1,650 marking the largest increase since September 2022. Rents for two-bedroom apartments also increased by 3.6%, bringing the median rent to $1,920, the highest jump for this category since September 2022 as well.

Interestingly, the rent for apartments with three or more bedrooms remained relatively stable. The median rent for these larger apartments was unchanged at $2,199, showing no growth year-over-year for the first time in five months. This indicates that while smaller apartments are seeing greater demand, larger units may be facing more price stability in comparison.

Looking Ahead: What This Means for Renters and Landlords

The steady rise in rents, combined with tightening rental supply, is likely to continue in the coming months, especially if the construction slowdown persists. Renters may find it increasingly difficult to secure affordable units, while landlords in high-demand metros will likely continue to raise rents, capitalizing on the limited supply and strong demand.

For renters, the shifting market underscores the importance of flexibility and preparedness. Those looking to move or negotiate for a new apartment may need to act more quickly, as fewer concessions and higher rents become the norm in many cities. On the other hand, landlords in these markets will likely be able to maintain higher rents and benefit from reduced vacancy rates, particularly as new construction lags behind demand.

Conclusion

The August 2025 rental market signals a turning point, as rents begin to tick upward again after a period of stagnation. The slow-down in new construction and persistent demand from homebuyers sidelined by high housing costs are expected to keep the pressure on rents. For renters, it’s a reminder to stay informed about local market conditions, as changes can be significant from one metro area to another. Meanwhile, landlords should be ready to leverage the favorable market conditions to adjust their pricing strategies accordingly.

As the supply of rental units continues to tighten, both renters and landlords need to navigate the market with awareness, as prices are likely to keep inching upward in the face of limited options. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.