Fewer Multifamily Permits Today Could Mean Costlier Rents Ahead

Rent jumps are expected in: New York, N.Y., Kansas City, Mo., Detroit, Mich., Washington D.C., San Jose, Calif., Baltimore, Md., Boston, St. Louis and Charlotte, N.C. Federal employment hot spots show no sign of meaningful impact from federal layoffs… yet , /PRNewswire/ -- Rents have been on a decline in the top 50 metros for over a year, but low multifamily permitting activity is making way for higher rent prices, according to the Realtor.com® February rent report. In fact, within the top 50 metros only 294,000 multifamily units were permitted in 2024, which is well below the 318,000 units permitted at the peak of the pandemic in 2020. National Rents by Unit Size "During the pandemic, rent prices surged significantly. While there has been a gradual correction, the current trend of declining rents over the past 19 months and a still-sizable number of multi-family units under construction have impacted builders' enthusiasm for new projects," said Danielle Hale, Chief Economist of Realtor.com®. "The nation is short 3.8 million homes according to Realtor.com® research. As builders attempt to right-size their construction pipelines amid shifting economic and policy cross currents, multifamily builders nationwide have made headway, evidenced by vacancy rates trending up. Still, the shortfall varies by market and region. The low level of permitting for multifamily housing, particularly in markets where rents are still climbing, may become a catalyst for future rent growth." When Supply is in a Pinch, Rent Will RiseIn hot markets where demand is high, and rent is already growing, low levels of multifamily housing permitting will cause further supply constraints and could make rents go up even higher in the future. For nine of the top 50 metros, multifamily permitting was lower than recent history in 2024, and these places experienced a rise in rent, including New York, N.Y., Kansas City, Mo., and Detroit, Mich. Hot Markets Where Rent is Poised To Grow as Permits Decline Metro Rent Increase YoY Multifamily Permits vs 5-year Baseline New York-Newark-Jersey City, N.Y.-N.J. 6.80 % -9.50 % Kansas City, M.O.-Kan. 6.00 % -6.00 % Detroit-Warren-Dearborn, Mich. 3.60 % -11.60 % Washington-Arlington-Alexandria, D.C.-Va.-Md-W.Va. 3.30 % -35.00 % San Jose-Sunnyvale-Santa Clara, Calif. 1.30 % -51.00 % Baltimore-Columbia-Towson, Md. 1.20 % -22.60 % Boston-Cambridge-Newton, Mass.-N.H. 0.70 % -22.30 % St. Louis, Mo.-Ill. 0.30 % -27.30 % Charlotte-Concord-Gastonia, N.C.-S.C. 0.20 % -19.00 % On the other hand, nine of the top 50 metros saw more multifamily permitting in 2024 than over the previous five years and experienced rent price declines YoY including Birmingham, Ala. where rent declined 5.4% YoY, and multifamily building permits grew by 22.10% from the average of the previous five years, Cincinnati, Ohio, where rent declined 3.3% while multifamily building permits grew 29.9%, and Cleveland, Ohio where rents declined 3.0% YoY, and multifamily building permits grew 37.9% from the average of the previous five years. In these metros, multifamily supply growth will put further downward pressure on rent.Federal Layoffs Haven't Affected Rent Prices…YetWhile data shows changes starting to happen in the for-sale markets of the major metros where federal employment is high, the rental shifts in these markets are relatively varied and show no meaningful changes, yet. Within the five major metros with the highest concentration of federally-employed workers rent is up 3.3% year-over-year in Washington D.C. with modest pick-up in Oklahoma City, Okla. (+2.0%) and Baltimore, Md. (+1.25%). In San Diego, Calif. however, rent experienced a sharp decline of 6% from a year ago, while also softening in Virginia Beach, Va. (-1.5%).Larger Rental Units Maintain Demand as Renters Stay PutAs fewer renters turn into first-time home buyers, demand for larger rental units remains high, with 2-bedroom units seeing the most long-term rent growth over the last five years, at 18.3%. That's compared to 1-bedroom units, which grew 14.3%, and studio units, which experienced the least rent growth, at 9.7%, in the same time frame.While studio units tend to experience more volatility in activity, this month rent growth for studio units dipped slightly at -0.8% YoY, more closely matching the year-over-year growth of one and two bedroom units, which both respectively experienced -0.7% dips in February 2025. National Rental Data – February 2025 Unit Size Median Rent Rent YoY Rent Change - 5 Years Overall $1,691 -0.9 % 14.4 % Studio $1,413 -0.8 % 9.7 % 1-Bedroom $1,583 -0.7 % 14.3 % 2-Bedroom $1,887 -0.7 % 18.3 % 50 Largest Metropolitan Areas – February 2025 Metro Median Rent (0-2 BR) YoY Change (0-2 BR) Multifamily Units Permitted 2024 Multifamily Units Permitted vs 5-year Baseline Atlanta-Sandy Springs-Roswell, Ga. 1,573 -2.6 % 13937 31.5 % Austin-Round Rock-San Marcos, Texas 1,462 -4.8 % 15008 -26.5 % Baltimore-Columbia-Towson, Md. 1,795 1.2 % 2425 -22.6 % Birmingham, Ala. 1,165 -5.4 % 556 22.1 % Boston-Cambridge-Newton, Mass-N.H. 2,936 0.7 % 7022 -22.3 % Buffalo-Cheektowaga, N.Y. NA NA 563 18.2 % Charlotte-Concord-Gastonia, N.C.-S.C. 1,520 0.2 % 6847 -19.0 % Chicago-Naperville-Elgin, Ill.-Ind. 1,776 -2.1 % 7403 1.4 % Cincinnati, Ohio-Ky.-Ind. 1,293 -3.3 % 2534 29.9 % Cleveland, Ohio 1,170 -3.0 % 720 37.9 % Columbus, Ohio 1,198 1.1 % 7195 32.7 % Dallas-Fort Worth-Arlington, Texas 1,461 -2.0 % 22912 -6.6 % Denver-Aurora-Centennial, Colo. 1,773 -6.4 % 6505 -41.8 % Detroit-Warren-Dearborn, Mich. 1,320 3.6 % 2023 -11.6 % Hartford-West Hartford-East Hartford, Conn. NA NA 1488 89.2 % Houston-Pasadena-The Woodlands, Texas 1,368 -0.9 % 11520 -44.3 % Indianapolis-Carmel-Greenwood, Ind. 1,284 -2.1 % 2314 -32.5 % Jacksonville, Fla. 1,508 -1.3 % 1753 -69.6 % Kansas City, Mo.-Kan. 1,370 6.0 % 3663 -6.0 % Las Vegas-Henderson-North Las Vegas, Nev. 1,448 -2.4 % 2301 -29.7 % Los Angeles-Long Beach-Anaheim, Calif. 2,715 -2.5 % 13265 -25.7 % Louisville/Jefferson County, Ky.-Ind. 1,223 -1.2 % 1854 -10.0 % Memphis, Tenn.-Miss.-Ark. 1,184 -1.4 % 1089 39.5 % Miami-Fort Lauderdale-West Palm Beach, Fla. 2,319 -2.2 % 10035 -28.6 % Milwaukee-Waukesha, Wis. 1,642 1.3 % 1884 101.3 % Minneapolis-St. Paul-Bloomington, Minn.-Wis. 1,498 -0.2 % 5055 -59.6 % Nashville-Davidson--Murfreesboro--Franklin, Tenn. 1,525 -1.7 % 5384 -52.0 % New Orleans-Metairie, La. NA NA 287 -47.3 % New York-Newark-Jersey City, N.Y.-N.J. 2,977 6.8 % 42230 -9.5 % Oklahoma City, Okla. 1,027 2.0 % 581 90.4 % Orlando-Kissimmee-Sanford, Fla. 1,673 0.0 % 8210 -18.8 % Philadelphia-Camden-Wilmington, Penn.-N.J.-Del.-Md. 1,751 -0.3 % 5054 -49.4 % Phoenix-Mesa-Chandler, Ariz. 1,492 -3.1 % 13577 -13.9 % Pittsburgh, Penn. 1,440 0.6 % 1738 2.3 % Portland-Vancouver-Hillsboro, Ore-Wash. 1,649 -2.7 % 2696 -58.5 % Providence-Warwick, R.I.-Mass. NA NA 656 175.4 % Raleigh-Cary, N.C. 1,458 -3.5 % 5574 -12.8 % Richmond, Va. 1,477 0.0 % 3408 -14.0 % Riverside-San Bernardino-Ontario, Calif. 2,071 -3.6 % 3012 -20.9 % Rochester, N.Y. NA NA 750 -8.9 % Sacramento-Roseville-Folsom, Calif. 1,883 -0.2 % 2701 -8.2 % San Antonio-New Braunfels, Texas 1,240 -1.3 % 3803 -54.1 % San Diego-Chula Vista-Carlsbad, Calif. 2,667 -6.0 % 7244 18.8 % San Francisco-Oakland-Fremont, Calif. 2,678 -3.3 % 2929 -60.4 % San Jose-Sunnyvale-Santa Clara, Calif. 3,300 1.3 % 1886 -51.0 % Seattle-Tacoma-Bellevue, Wash. 1,957 -0.8 % 9880 -36.1 % St. Louis, Mo.-Ill. 1,304 0.3 % 1821 -27.3 % Tampa-St. Petersburg-Clearwater, Fla. 1,739 -0.4 % 7545 -9.0 % Virginia Beach-Chesapeake-Norfolk, Va.-N.C. 1,487 -1.5 % 1250 -42.8 % Washington-Arlington-Alexandria, D.C-Va.-Md.-W.Va. 2,283 3.3 % 9680 -35.0 % MethodologyRental data as of January 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. Construction permitting data comes from the Census Bureau Building Permits Survey.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: Asees Singh, [email protected]SOURCE Realtor.com WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

Fewer Multifamily Permits Today Could Mean Costlier Rents Ahead

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