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Tariffs and Rising Construction Costs Could Signal Trouble Ahead For Rents - Despite Two Years Price Declines

The impact is being felt across the country as the Midwest saw the steepest annual drop in completions, followed by the South.

AUSTIN, Texas , Aug. 12, 2025 /PRNewswire/ -- Rent prices declined for the 24th month in a row in July, marking a full two years of easing rental pressure in the U.S. rental market. At the same time, a growing pullback in multifamily development driven by rising construction costs and new tariffs on key materials like aluminum and steel is signaling potential trouble ahead for future rental supply, according to the July Realtor.com® Monthly Rent Report.

The median asking rent for 0–2 bedroom properties in the 50 largest metros fell to $1,712 in July, a $43 (-2.5%) decline compared to the same time last year. While monthly rent growth continues to follow a typical seasonal pattern, it has consistently lagged behind last year's pace, indicating a persistently cooler rental market. Rent prices remain $254 (17.4%) higher than their pre-pandemic levels, but are now $47 (-2.7%) below the peak reached in August 2022.

"Rents have now declined for two full years, giving renters more leverage and financial breathing room than they've had in some time," said Danielle Hale, Chief Economist at Realtor.com®. "But there are early signs that relief may not last forever. Developers are pulling back in key markets, and construction headwinds—especially tariffs on steel, lumber and aluminum—could create a shortfall in new rental supply down the line."

Multifamily Development Pulls Back Sharply
In June 2025, multifamily completions for buildings with two or more units fell 38.1% year-over-year, dropping from a seasonally adjusted annual rate of 656,000 units in June 2024 to just 406,000. This significant decline reflects the growing challenges facing developers, including elevated construction costs, shrinking profit margins due to lower rents, and newly expanded tariffs on imported building materials.

The impact is being felt unevenly across the country. The Midwest saw the steepest annual drop in completions (–55.7%), followed by the South (–33.5%), Northeast (–33.0%), and West (–28.9%).

Disrupted Local Permitting Trends with New Higher Tariffs Signals More Pull Backs Ahead
Permitting trends across large metro areas show that some markets are already feeling the effects from higher construction costs and compressed profits:

  • Orlando, Fla.: Permits for multifamily units dropped -54.9% from Q1 to Q2 2025—the first Q2 decline since 2022.
  • Philadelphia, Pa. and San Antonio, Texas also saw their first Q2 permitting dips in three years.
  • Charlotte, N.C. and Las Vegas, N.V. experienced their largest quarterly permitting declines in Q2 since 2022.
  • Even San Francisco, Calif., which saw a modest increase, posted its slowest Q2 growth in permitting in three years.

These local slowdowns suggest that developers are responding to worsening conditions by reducing plans for new projects—an early warning sign that the supply of new rental units could tighten over time. Looking ahead, the doubled tariffs on imported steel and aluminum announced in June could make this condition worse.

"If construction pullbacks continue, today's renter-friendly market could give way to a tighter, more competitive landscape," said Hale. "It's a trend we'll be watching closely, especially in markets that had previously led the way in multifamily development."

Table: Markets With Disrupted Permitting Trends

Market

5 Units or
More,
2025Q2

% Diff
2025q2 vs.
2025q1

% Diff
2024q2 vs.
2024q1

% Diff
2023q2 vs.
2023q1

% Diff
2022q2 vs.
2022q1

Orlando-Kissimmee-Sanford,
FL

2251

-54.9 %

66.9 %

44.5 %

12.6 %

Philadelphia-Camden-
Wilmington, PA-NJ-DE-MD

937

-28.1 %

18.9 %

27.9 %

72.7 %

San Antonio-New Braunfels,
TX

420

-27.3 %

8.3 %

57.7 %

19.2 %

Charlotte-Concord-Gastonia,
NC-SC

970

-54.8 %

178.3 %

35.6 %

-19.8 %

Las Vegas-Henderson-North
Las Vegas, NV

926

-34.3 %

60.7 %

-0.9 %

-15.0 %

San Francisco-Oakland-
Fremont, CA

1346

15.9 %

100.9 %

85.4 %

38.5 %

Rent Trends by Unit Size
While rent prices typically rise during spring and summer, this year's seasonal lift has been softer than usual. As of July, rents were up just 1.2% year-to-date, compared to 2.8% growth over the same period in 2024.

Despite near-term affordability gains for renters, the sharp drop in multifamily completions and early signs of weakening permitting activity may shift market dynamics later this year or in 2026. Realtor.com® will continue to monitor construction trends and policy changes to track the evolving landscape for renters and developers alike.

Table: National Rents by Unit Size, July 2025

Unit Size

Median Rent

Rent YoY

Consecutive 
Months of
Decline

Total Decline
from Peak

Rent Change -
6 Years

Overall

$1,712

-2.5 %

24

-2.7 %

17.4 %

Studio

$1,428

-1.4 %

23

-4.0 %

13.5 %

1-Bedroom

$1,590

-2.8 %

26

-4.1 %

15.6 %

2-Bedroom

$1,898

-2.3 %

26

-3.1 %

19.0 %

 

Median Asking
Rent

YOY

Six Year
Changes

# Permits for Buildings with 5+
Units, 2025Q2

Atlanta-Sandy Springs-Roswell, GA

1,576

-4.3 %

10.2 %

2408

Austin-Round Rock-San Marcos, TX

1,460

-5.3 %

15.5 %

2706

Baltimore-Columbia-Towson, MD

1,827

-0.1 %

15.1 %

691

Birmingham, AL

1,202

-3.8 %

14.2 %

122

Boston-Cambridge-Newton, MA-NH

2,993

-1.5 %

14.7 %

1396

Buffalo-Cheektowaga, NY

NA

NA

NA

104

Charlotte-Concord-Gastonia, NC-SC

1,519

-1.5 %

15.6 %

970

Chicago-Naperville-Elgin, IL-IN

1,785

-2.4 %

12.7 %

2270

Cincinnati, OH-KY-IN

1,312

-4.4 %

15.5 %

408

Cleveland, OH

1,229

-2.0 %

25.5 %

271

Columbus, OH

1,225

-0.6 %

22.5 %

3473

Dallas-Fort Worth-Arlington, TX

1,458

-2.6 %

15.4 %

8649

Denver-Aurora-Centennial, CO

1,783

-7.7 %

7.3 %

2706

Detroit-Warren-Dearborn, MI

1,297

-2.1 %

11.4 %

868

Hartford-West Hartford-East Hartford, CT

NA

NA

NA

158

Houston-Pasadena-The Woodlands, TX

1,352

-3.6 %

8.4 %

3804

Indianapolis-Carmel-Greenwood, IN

1,298

-2.9 %

30.6 %

833

Jacksonville, FL

1,499

-4.3 %

26.0 %

804

Kansas City, MO-KS

1,404

3.2 %

27.4 %

1360

Las Vegas-Henderson-North Las Vegas, NV

1,471

-2.9 %

22.8 %

926

Los Angeles-Long Beach-Anaheim, CA

2,751

-3.2 %

11.7 %

3605

Louisville/Jefferson County, KY-IN

1,253

-4.9 %

20.7 %

940

Memphis, TN-MS-AR

1,186

-3.3 %

15.0 %

35

Miami-Fort Lauderdale-West Palm Beach, FL

2,332

-2.9 %

36.3 %

5489

Milwaukee-Waukesha, WI

1,662

-1.5 %

15.5 %

288

Minneapolis-St. Paul-Bloomington, MN-WI

1,514

-2.6 %

3.1 %

1398

Nashville-Davidson--Murfreesboro--Franklin, TN

1,531

-3.7 %

22.4 %

905

New Orleans-Metairie, LA

NA

NA

NA

95

New York-Newark-Jersey City, NY-NJ

2,889

0.0 %

26.0 %

7166

Oklahoma City, OK

985

-2.9 %

7.1 %

540

Orlando-Kissimmee-Sanford, FL

1,694

-1.4 %

21.8 %

2251

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

1,771

-2.7 %

9.1 %

937

Phoenix-Mesa-Chandler, AZ

1,491

-5.4 %

23.5 %

3747

Pittsburgh, PA

1,490

2.3 %

42.3 %

340

Portland-Vancouver-Hillsboro, OR-WA

1,693

-4.5 %

16.2 %

946

Providence-Warwick, RI-MA

NA

NA

NA

191

Raleigh-Cary, NC

1,498

-4.6 %

24.0 %

1563

Richmond, VA

1,526

-0.5 %

26.2 %

1016

Riverside-San Bernardino-Ontario, CA

2,040

-5.7 %

14.6 %

1661

Rochester, NY

NA

NA

NA

50

Sacramento-Roseville-Folsom, CA

1,889

-3.3 %

25.7 %

845

St. Louis, MO-IL

1,347

-0.7 %

19.5 %

293

San Antonio-New Braunfels, TX

1,246

-2.6 %

21.0 %

420

San Diego-Chula Vista-Carlsbad, CA

2,668

-6.6 %

11.1 %

2636

San Francisco-Oakland-Fremont, CA

2,747

-2.4 %

-6.0 %

1346

San Jose-Sunnyvale-Santa Clara, CA

3,442

0.9 %

6.6 %

474

Seattle-Tacoma-Bellevue, WA

1,999

-3.0 %

6.4 %

1376

Tampa-St. Petersburg-Clearwater, FL

1,741

-0.2 %

39.5 %

2652

Virginia Beach-Chesapeake-Norfolk, VA-NC

1,516

-2.2 %

19.9 %

38

Washington-Arlington-Alexandria, DC-VA-MD-WV

2,327

0.6 %

16.1 %

1708

Methodology
Rental data as of July 2025 for studio, 1-bedroom, or 2-bedroom units advertised as for-rent on Realtor.com®. Rental units include apartments as well as private rentals (condos, townhomes, single-family homes). We use rental sources that reliably report data each month within the 50 largest metropolitan areas. Realtor.com began publishing regular monthly rental trends reports in October 2020 with data history stretching back to March 2019.

About Realtor.com®
 Realtor.com ® pioneered online real estate and has been at the forefront for over 25 years, connecting buyers, sellers, and renters with trusted insights, professional guidance and powerful tools to help them find their perfect home. Recognized as the No. 1 site trusted by real estate professionals, Realtor.com® is a valued partner, delivering consumer connections and a robust suite of marketing tools to support business growth. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc.

Media contact: Mallory Micetich, press@realtor.com

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SOURCE Realtor.com