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In This Article
Developers built nearly 600,000 apartment units last year, setting a new record. That glut of new supply, coupled with fears over trade war-induced inflation and recession, has caused rents to slow, stall, or even drop in 2025.
In fact, 73 cities across the country have seen rents fall in the first five months of the year. Here’s where they are, a deeper dive into what’s causing rents to fall, and the outlook for rents moving forward.
Cities With Falling Rents
With a few exceptions, cities with falling rents have mostly clustered in the Sunbelt, Northeast, and Midwest.
While all real estate is local, the nationwide trend has certainly moved in renters’ favor.On its Rent Manager overview, Zillow now shows the average rent nationwide has dropped by $30 over the last year.
Softening rental markets can ding investors in other ways, too.Often, property managers have to offer incentives to lure new renters and keep occupancy strong.While most of the multifamily investments we’ve gone in on through the co-investing club have avoided it, we have seen a couple of properties that have had to boost incentives.
For reference, here are the 20 cities where rents have fallen the most in 2025:
CityAverage Rent2025 Rent Decline1. Athens, OH$802-8.51%2. The Villages, FL$2,007-7.21%3. Sunbury, PA$904-6.73%4. Pullman, WA$1,436-5.94%5. Naples, FL$2,833-5.37%6. Sevierville, TN$1,736-5.33%7. Key West, FL$3,887-5.31%8. Fond du Lac, WI$1,045-5.02%9. Edwards, CO$3,864-4.24%10. Bay City, MI$1,240-3.74%11. Cortland, NY$1,292-3.71%12. Georgetown, SC$2,168-3.52%13. Mount Pleasant, MI$1,120-3.39%14. Blacksburg, VA$1,767-3.36%15. Freeport, IL$793-2.98%16. Hot Springs, AR$1,385-2.83%17. Clearlake, CA$1,813-2.82%18. Lebanon, PA$1,388-2.81%19. Hattiesburg, MS$1,369-2.72%20. Mount Vernon, WA$2,161-2.42%
What’s Causing Rents to Drop?
Markets move in cycles, and rents surged after the pandemic, after remaining artificially locked due to eviction moratoriums. That post-pandemic surge has slowed to a trickle in 2025, and a drought in many markets.
Glut of new supply
As touched upon, some markets got flooded with new rental inventory. Housing starts for multifamily properties reached a monthly low of 233 in April 2020, at “peak pandemic panic.” Over the next two years, they nearly tripled to 615 by November 2022.
Many of those projects completed in 2024 are coming onto the market now in 2025.
Softening labor market
As of this writing, the latest Labor Department datasaw the four-week moving average of jobless claims reach the highest level since August 2023.
Fewer employers are hiring, and fewer workers are quitting. There’s so much uncertainty in the economy betweentrade wars, tariffs, and wild public policy swings in Washington, D.C. that employers and employees alike are treading carefully.
Less confident workers make more conservative renters, who are less willing to splurge on higher rents.
Consumer spending pullback
It forms a broader trend of consumers pulling back in general. Everyone appears to be holding their breath, waiting to see what comes next. And in doing so, they’re spending less and hoarding more cash.
While it’s hard to measure “vibes,” the Consumer Confidence Index fell 11.3% from June 2024 to June 2025.
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Implications for Income Investors
Kapil Singla, an investor with Bright Future Home Buyers in Birmingham, tells BiggerPockets that even slight rent drops mean tenants have more negotiating power and time to review listings. “For investors, it is a clear market signal to review pricing, boost unit appeal, and position yourself as the best option nearby,” he adds.
I wrote earlier this month about cities where home prices are falling. Falling rents put even more downward pressure on rental property prices, which creates room for negotiating deep discounts with desperate sellers.
“When rents soften, sellers get more flexible, and buyers can secure better deals,” adds Austin Glanzer of 717HomeBuyer in a conversation with BiggerPockets. “It’s a great time to scour for underpriced properties and add value through renovations.”
That proves doubly true if you believe inflation will rear up again due to incoming tariffs. Rental investors can lock in monthly loan payments in today’s dollars, only to have inflation drive rents up over the next few years.
James Heller with The Atlas Portfolio in Cincinnati recommends investors not just seek out great deals but to also add revenue. “Look for properties with room for strategic upgrades,” he advised when speaking to BiggerPockets.
That could mean value-add renovations, of course, but it could also mean adding an ADU or splitting one property into two units.It could mean switching from a long-term rental to a short-term or medium-term rental or some other creative way to generate more income from the same property.
At the co-investing club, we’ve vetted and invested in some group deals where the operator added value even more creatively. For example, last month, we invested in two property tax abatement deals, where operators partnered with local municipalities to set aside a percentage of the units for affordable housing. In exchange, they got a property tax abatement that instantly added six figures in net operating income.
What’s the Outlook for Future Rents?
The flood of new rental units hitting the market over the last two years is about to ease. Yardi projects far fewer new units hitting the market in 2026 and 2027 than in 2022-2025. Likewise, CBRE sees the same slowing of new supply and retightening of rental markets. Check out their timelines for recovery for these major cities with negative rent growth:
CBRE
Circling back to multifamily housing starts, they dropped to 316 in May.
In short, rents appear to be bottoming out right about now nationwide.Zillow projects total rent growth in 2025 at 2.8% for single-family homes and 1.6% for multifamily. Meanwhile, CBRE forecasts total rent growth at a 2.6% annual rate by the end of 2025.
Soft rental markets create opportunities and bargains for investors. In the co-investing club, we continue meeting every month to vet new deals and go into them together.It’s a core part of my investing philosophy ofdollar-cost averaging: I invest $5,000 in a new real estate dealevery single month. That helps me earn high returns over time, even when other investors hem and haw and fret over the headlines.
Don’t expect rents to skyrocket like they did in 2022 and 2023, but don’t expect them to fall in most markets either. Gradually, the glut of supply will get absorbed over the next two years, and most rental markets should stabilize by the end of this year.
Through it all, I plan to keep investing small amounts every month as one more member of an investment club.
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G. Brian Davis
SparkRental
Brian Davis runs a real estate investment club at SparkRental.com, allowing members to pool funds for fractional in
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