The U.S. rental housing market is facing renewed strain as the post-pandemic surge in multifamily construction begins to wane, exacerbating affordability challenges for renters across the country. According to data from the U.S. Census Bureau, multifamily housing completions have declined by 28% since peaking in August 2024, signaling a significant slowdown in new rental supply .
This contraction in construction activity comes at a time when mortgage rates remain elevated, hovering near 7%, making homeownership less attainable for many Americans. As a result, a growing number of individuals and families are turning to the rental market. A recent survey by Fannie Mae indicates that over one-third of respondents would prefer renting if they had to move—the highest share since October 2024 .
The increased demand for rental housing, coupled with the slowdown in new multifamily developments, is placing upward pressure on rents. Zillow projects that single-family rents will rise by 3.2% in 2025, while multifamily rents are expected to increase by 2.1% . Notably, the cost of renting a single-family home has reached record highs, averaging 20% more than renting a multifamily apartment.
The disparity in rent increases between single-family and multifamily units reflects broader trends in housing preferences and availability. While multifamily construction experienced a boom in recent years, the pace has slowed considerably. In 2024, multifamily completions reached approximately 520,000 units—the highest level in decades—but construction starts declined sharply, with only 36,000 units breaking ground in the third quarter, down from over 66,000 in the first quarter .
The slowdown in construction is attributed to several factors, including rising construction costs, labor shortages, and tighter financing conditions. These challenges have made it more difficult for developers to initiate new projects, leading to concerns about the adequacy of future rental supply. If construction does not pick up, existing affordability challenges are expected to worsen in the coming years .
Meanwhile, the homebuying market remains sluggish due to high mortgage rates and economic uncertainty. Zillow forecasts a 1.4% decline in home values in 2025, reflecting a broader deceleration in the housing market . This trend further incentivizes individuals to remain in the rental market, intensifying demand.
Looking ahead, experts anticipate stronger rent growth into 2027 and 2028, driven by limited new housing supply and continued affordability challenges in the homebuying market. The persistent imbalance between supply and demand suggests that rental prices will continue to rise, placing additional financial strain on renters.
In response to these challenges, policymakers and industry stakeholders are exploring solutions to increase the availability of affordable rental housing. Strategies include incentivizing the construction of new multifamily units, streamlining permitting processes, and providing financial assistance to renters. However, addressing the complex factors contributing to the current rental market dynamics will require coordinated efforts at the federal, state, and local levels.
As the U.S. rental market continues to tighten, renters may face increasing competition and higher costs. Without significant interventions to boost supply and improve affordability, these trends are likely to persist, impacting millions of households nationwide.