The 2025 renter’s market won’t last economists say
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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…
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