Asking Rents Are Falling in 28 Major U.S. Metros—the Most Since 2023

U.S. asking rents experienced a median decrease of 1% year-over-year in May, settling at $1,633, driven by elevated apartment supply and increased renter negotiating power; Austin saw the steepest decline at nearly 9%, while rents reached record highs in Chicago, Cincinnati, Memphis, and Washington, D.C. Multifamily construction near 50-year highs has led to increased vacancy rates, with less than half of new apartments being rented within three months, although overall rental volatility has significantly decreased compared to the pandemic era.

Analysis

The U.S. rental market exhibited signs of increased supply pressure in May, with the median asking rent declining 1% year-over-year to $1,633, a level $72 below the August 2022 peak, according to data covering the three months ending May 31, 2025. This softening is primarily driven by elevated apartment construction, which has been near a 50-year high, leading to supply outpacing renter demand despite its strength; the rental vacancy rate for buildings with five or more units reached 8.2% in the first quarter, matching the highest level since early 2021. Consequently, with many new units sitting vacant for months, renters have gained negotiating leverage. While the national median asking rent saw a typical 0.5% month-over-month increase in May, significant regional variations were observed: Austin experienced the largest decline, with rents falling 8.8% year-over-year to $1,385, the lowest since February 2021, attributed to high multifamily permitting. Conversely, markets such as Cincinnati (up 7.4% YoY to a record $1,460), Chicago, Memphis, and Washington D.C. saw rents hit record highs, often correlated with lower-than-average multifamily construction. Nationally, two-bedroom apartments saw the most significant rent decrease at 1.8% YoY. Despite these shifts, the overall market volatility remains subdued, with May marking the 15th consecutive month of year-over-year rent changes of approximately 1% or less.

Key Decisions for Investors

• Investors in residential real estate, particularly multifamily REITs, should scrutinize geographic exposure, favoring markets with limited new supply and strong rent growth such as Cincinnati and Chicago, while exercising caution in oversupplied markets like Austin.
• The ongoing moderation in national asking rents, which fell 1% year-over-year in May, may contribute to easing broader inflation metrics; therefore, monitor its persistence as a potential influence on future monetary policy and interest rate sensitive assets.
• Given high vacancy rates stemming from near record multifamily completions, anticipate continued near-term pressure on rental income growth across many U.S. markets, though a future slowdown in construction, which has reportedly begun to taper, could eventually tighten conditions and support rent rebounds.