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Renters should reap the benefits of a lower-cost rental market while they can. It might not last, experts say.
As of December, the median asking rent price in the U.S. was $1,695, down 0.5% — or $8 — from November, according to a report by Realtor.com. The latest rent price is 1.1% lower — or $18 — from a year before, and down 3.7% from peak highs in July 2022.
Rent prices have come down because newly built apartments are increasing the supply of units available. With more inventory, some property managers must consider lowering their asking prices to attract tenants.
“We’re calling it a renter’s market. We think that’s going to continue for the next year,” Daryl Fairweather, chief economist at Redfin, recently told CNBC.
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But this renter-friendly market is not forever.
With construction activity of multifamily housing slowing down, the renter’s market might fizzle out after this year, experts say.
“This construction boom is probably going to be over and rents will probably start going up again,” Fairweather said.
What’s slowing down supply
“We’re seeing multifamily construction permitting slowing a bit,” said Joel Berner, a senior economist at Realtor.com.
There are several reasons behind this. With rent prices coming down, it’s not “economically viable,” or profitable, at the moment to build multifamily housing, Berner said.
There’s also a level of uncertainty about the current administration’s policies around tariffs and deportations, he said.
This week, President Donald Trump imposed broad tariffs on imports from China. He paused the implementation of 25% tariffs on Canada and Mexico for at least 30 days.
In part due to such policy changes, costs are increasing for builders, Berner said. Tariffs on lumber and other materials make prices go up while mass deportation plans are making the labor force “smaller and more expensive,” he said.
Nearly a third, or 31%, of construction tradesmen in the U.S. in 2022 were immigrants, according to the National Association of Home Builders, which analyzed 2022 Census data.
“Anything that threatens to disrupt the flow of immigrant labor will send shock waves to the labor market in home construction,” Jim Tobin, president and CEO of the NAHB, previously told CNBC.
3 key moves for renters
If you’re in the rental market right now or plan to start looking this year, here are key steps you can take to maximize affordability while it’s still a renter’s market:
1. Ask for a multiyear lease to secure a lower cost
If you’re in an area where prices have been coming down, you could tell your landlord or property manager you’re interested in signing a multiyear lease if they reduce the rent price, Berner said.
In such negotiations, it can be helpful to have something to offer in return, like being flexible on the length of the lease, or paying a larger security deposit, he said.
Tenant turnover can be expensive for landlords, especially if the property sits unoccupied for a few months.
2. If you plan to buy a home, start saving now
“If you’re a renter who intends to become a homeowner, this is a good time to save on rent,” Berner said — and then bank the difference for your down payment.
Builders are expected to pivot their priorities and build more homes in the for-sale market this year. Single-family housing starts are forecast to increase by 13.8% in 2025, totaling 1.1 million new homes, according to Realtor.com data.
Many renters struggle to build wealth in the U.S., and financial obstacles like high rent can keep would-be buyers from coming up with enough money for a down payment.
If you manage to lower your monthly rent costs, “stash away some cash for a down payment,” Berner said. “The larger your down payment can be, the better.”
3. Keep tabs on affordable markets elsewhere
It can be tempting to look at more affordable housing markets as ideal places to move to, but experts don’t recommend uprooting your life and career just because rent prices are falling in one metro versus another.
On the other hand, if you’re looking to move at some point, it can be helpful to stay updated on where affordability is improving the most.
For example, Austin, Texas, is the top metro among Redfin’s “most affordable metros,” or places where renters typically earn more money than they need in order to afford the typical rental unit. The typical renter in the area makes $69,781 annually, which is 25.14% higher than the $55,760 the site estimates is required to afford a typical apartment there, Redfin found.
“Pay attention to how things are changing market to market and where you know you can make your money go the furthest,” Berner said.
