The U.S. Rental Market in 2025: Midway Point and Predictions for 2026
As we move through 2025, the U.S. rental market is navigating economic shifts, regulatory changes, and evolving renter preferences, while supply and demand start to play catch up. Rental growth is levelling out nationally, with regional variations and evolving tenant preferences shift the market.
Rental Growth is Stabilizing
For the first time since the pre-Covid era, after years of significant increases, rents are showing signs of stabilization. Freddie Mac projects a national rent growth of 2.2% for 2025, slightly below the recent historical average of 2.8% . This moderation is attributed to a surge in new rental units, with nearly 600,000 added in 2024. Supply is matching demand as housing builds are catching up, and Boomers are selling their family homes.
Regional Variations Are Evolving
While the national trend points to stabilization, regional disparities are growing. For example, Midland and Odessa, Texas, are projected to see rent increases of 17.7% and 13.2%, respectively, due to strong local economies and housing demand . Conversely, some areas like Rhode Island and South Dakota may experience rent declines as supply outpaces demand. Our article regarding the sunbelt gives a further breakdown of what can be expected in the future and why.
Regulatory Changes Impacting Landlords
People often wax nostalgic about rent control in the NYC boroughs back in the 1980’s, and now it appears this trend is making a resurgence nationwide, which is good news for renters. In May, Washington became the third state to implement statewide rent control, capping annual increases at 7% plus inflation or a maximum of 10% . This move follows similar legislation in Oregon and California and reflects a growing trend of tenant protection laws. Landlords must navigate these regulations carefully, as compliance becomes increasingly complex .
Single-Family Rentals Gaining Popularity
Single-family rentals (SFRs) are becoming more popular, with 31% of renters now living in SFRs . Rent prices for SFRS have increased by 2.4% year-over-year as of January 2025 . Investors are responding to this trend, with 32% planning to expand their SFR portfolios in 2025 . This might be a similar battle we have seen with Airbnb owners vs hotels, with hotels regaining market share by correcting their pricing models. This space will be one to watch, and one private equity holders are keeping close dibs on.
Short-Term Rentals Facing Challenges
Has the Airbnb bubble burst? The short-term rental market is experiencing a slowdown, with supply growth projected to decelerate further in 2025 before stabilizing in 2026. Urban and mid-size cities are seeing a shift towards larger, higher-priced listings, affecting pricing dynamics and occupancy rates.Small town and urban listings are expected to make a recovery, but not until 2026.
Economic Factors Influencing the Market
High interest rates and inflation continue to impact the housing market. The CEO of CRH, a major building materials producer, noted that the recovery of the U.S. residential construction market is likely delayed due to these economic pressures. This delay affects the overall housing supply and, consequently, the rental market. Tariffs might continue to impact this, so be sure to shop around in areas with a rental vacancy rate of 3% or higher, if price is a concern.
Tenant Preferences Dictate Change
Renters are increasingly prioritising affordability and flexibility. The 2025 Zillow Rentals Consumer Housing Trends Report indicates a 'shift in renter demands, with a focus on value and digital conveniences'. Landlords and property managers are adapting by offering more flexible lease terms and enhancing digital services to meet these expectations.Location matters, but so does lifetyle, and landlords who can cater to this will shine.
The U.S. rental market in 2025 is in a tug-of-war, with renters slowly gaining more financial protections and having more choice, as supply and demand begin to find a balance.
