The Great Rental Shift: Affordability and Market Changes in 2025

In 2025, the rental market is experiencing a remarkable shift, offering a much-needed respite for prospective renters. According to the latest report from Zillow, rental affordability has improved significantly, reaching its best levels in the past four years. With rental costs now requiring only 28.4% of the median household income across the nation, renters can breathe a little easier.

Landlords are responding to shifting market dynamics, providing concessions at unprecedented rates. This rise in rental incentives, such as offering free months of rent or complimentary parking, reflects the competitive environment facing renters. In fact, as of September 2025, a record-breaking 37.3% of rental listings on Zillow included some form of concession, a notable increase from just 14.4% in 2019. This trend indicates that rental managers are adjusting their strategies in response to the changing market and increased vacancy rates.

The root of this improvement in rental affordability can be traced back to a surge in housing supply. In 2024, builders completed more multifamily units than they had in any year over the past fifty years to meet the high demand for housing created during the pandemic. Markets that managed to build rapidly, particularly in the South, have seen significant benefits, creating pockets of affordability that were previously absent.

As noted by Orphe Divounguy, a senior economist at Zillow, “Markets that built more—and faster—are seeing that investment pay off with more renters able to comfortably afford an apartment.” This insight highlights the role of supply in stabilizing the rental market.

On a national level, the growth rate for rent in multifamily units has cooled considerably, now standing at 1.7% year-over-year as of September. This represents one of the lowest growth rates recorded since 2021. A sluggish labor market is also influencing this moderation, proving that job availability is vital for residential mobility and, ultimately, rental prices.

Interestingly, the rental market’s downturn is more pronounced in certain regions. Areas such as Austin, Denver, San Antonio, Phoenix, and Orlando have seen rents drop year-over-year, with Austin leading the way at a decrease of 4.7%. Conversely, cities known for their strict building regulations, such as Chicago, San Francisco, and New York, are experiencing higher rent growth rates.

Even the historically resilient single-family rental market is feeling the pressure, with a mere 3.2% year-over-year increase in September—the lowest rate since Zillow began tracking this data in 2016. This downturn further underscores the changing landscape of the rental market and indicates that even single-family homes, once seen as a safer investment, are not immune to market fluctuations.

As we look to the future, it seems probable that the trend of increased concessions will continue, especially as winter approaches when demand typically softens. Property managers, facing increased competition, may need to reconsider their pricing strategies in light of the current economic realities.

Yet, despite challenges, the improvements in affordability are tangible. Over the past year, rental affordability has enhanced in 38 out of the 50 largest U.S. metropolitan areas. Cities such as Denver, Austin, Miami, San Antonio, and Phoenix have emerged as the biggest winners in this evolving scenario, giving renters in these markets additional financial breathing room.

In conclusion, 2025 stands out as a defining year in the rental market, characterized by improved affordability, slowed rent growth, and a surge in landlord concessions. These changes reflect a broader adjustment in the housing landscape and signify a shift towards a more renter-friendly environment powered by supply and strategic market adaptations. As conditions continue to evolve, both renters and landlords must remain vigilant and responsive to the shifting tides of the rental market.