Will Rent Prices Continue to Fall in 2025? Future Outlook

Recently, there has been good news for renters across the United States, as rent prices have fallen for 19 consecutive months, providing some relief. However, looking at the real estate market trends, it’s clear that renters shouldn’t be too complacent. The shortage of new construction could lead to rising rent prices in the long term.

How Much Have Rent Prices Fallen?

According to the February 2025 rental report from Realtor.com®, the median rent in the 50 largest U.S. cities was $1,691, which is a $15 decrease compared to the same time last year. This marks a 19-month streak of falling rent prices. However, compared to the pre-pandemic period, rent remains high. Currently, average rent is more than 14% higher than before COVID-19, which continues to burden renters.

Why the Decline in Rent Prices Might Stop

While the continuous drop in rent prices may seem like good news, it’s not necessarily a positive development in the long run. The decrease in rent prices has led to a slowdown in new multifamily housing (like apartments) construction, which could result in a future supply shortage.

In 2024, only 294,000 new multifamily units were authorized in the 50 largest U.S. cities, the lowest since 2017. Even during the height of the pandemic in 2020, there were 318,000 new permits issued.

Joel Berner, an economist at Realtor.com®, explained, "With rent prices falling throughout 2024, investors have reduced new construction, leading to a decrease in supply."

Could Rent Prices Rise Again?

Experts believe that the decline in rent prices won’t last forever. The reduced supply of rental units suggests that rent prices could start rising again in the coming years. Berner warns that "If the current trend of slowing new construction continues, rent prices are likely to increase in the future."

How Changes in the Rental Market Affect Home Purchases

If rent prices continue to fall, renters might be less motivated to purchase homes. On the other hand, if rent prices rise again, more people may consider buying homes, especially those who had previously hesitated due to high mortgage rates and home prices.

Conclusion: Is Now the Right Time?

✔ Rent prices have been falling for 19 months, but the potential for future increases due to supply shortages is high.✔ The slowdown in new multifamily housing construction may disrupt the supply-demand balance in the rental market.✔ If rent prices rise again, there could be an uptick in home buying demand, which might revitalize the real estate market.

If you're curious about the changes in rent prices and real estate trends, consider consulting an expert!