U.S. rental market faces rising costs as housing supply slows

A new analysis by Zillow and StreetEasy reveals that the U.S. rental market is reaching an inflection point as the recent surge in apartment supply begins to fade. The typical U.S. asking rent rose to $1,962 in July, a 2.3% year-over-year increase, marking the fastest annual growth rate in over a year.

Families with children are disproportionately affected by housing costs. Approximately one in three family households with children under 18 are renting, and 54.1% of those families are considered rent burdened, spending more than 30% of their income on housing. This burden is driven by a structural shortage of larger units; only 24.4% of Zillow rentals offered three or more bedrooms in July.

While high concession rates persist in markets with recent construction booms—such as Charlotte, Denver, and Dallas—the overall pipeline of new multifamily permits has dropped 31% from its 2022 peak. As supply narrows, rent growth is accelerating, particularly in markets with limited new inventory like San Francisco and San Jose.