Single-Family Rent Growth Cools After a Strong First Half of the Year

After strengthening in the first half of 2025, single-family home rents began to lose momentum in July, signaling that landlords may soon have to meet tenants where they are as consumer budgets tighten.

According to the latest data from Cotality, single-family rent prices in July were up 2.3% from a year earlier. That’s a slower pace than the 3.1% annual increase recorded in July 2024, and marks the first time growth has slipped below the lower end of the pre-pandemic 10-year average range.

“After a strong start to the year, single-family rent growth is clearly losing steam,” said Molly Boesel, senior principal economist at Cotality. “In July, we broadly saw weakening in annual single-family rent growth across metro areas and price tiers.”

Growth Slows Sharply Month to Month

On a monthly basis, rents rose just 0.2% from June to July, well below the historical July average of 0.7%. That’s a notable shift from the unusually strong gains seen earlier this year.

Even markets that had been resilient are now showing signs of cooling. Los Angeles, which had been buoyed by demand after recent wildfires, is slowing. The exception is Chicago, which led the nation in July rent growth due to tight inventory and steady demand.

Top 10 Metro Areas for Rent Growth

Among the nation’s 10 largest metropolitan markets, Chicago was on top at 5.1% rent growth, followed by the New York City metro area at 3.7%. Philadelphia and Washington, D.C. came next, while Los Angeles rounded out the top five.

At the bottom of the list were Dallas and Miami, with Miami showing no annual rent growth at all—a dramatic reversal from 2022, when pandemic migration to the South fueled a stunning 40% annual rent increase.

Weakening Across All Price Tiers

The slowdown wasn’t limited to one segment of the market.

High-end properties: Rents rose 2.9% annually, down from 3.2% the year before.

Low-end properties: Rents rose just 1.6% annually, a steep drop from 2.8% in July 2024.

Single-Family Rentals vs. Apartments

In recent years, single-family rentals had outperformed apartments, largely because of:

Strong demand from families priced out of homeownership.

Desire for larger homes in good school districts.

Limited single-family rental supply compared with a flood of new apartment construction.

But with affordability stretched and consumers pulling back, the advantage for single-family landlords may be narrowing.

Impact on Investors

Single-family rental REITs like Invitation Homes and American Homes 4 Rent have been expanding by building entire rental communities to meet demand. However, a recent report from Parcl Labs found that the biggest rental REITs are now selling more homes than they are buying—a sign they are consolidating holdings and shifting away from standalone homes.

If rent growth continues to soften, these firms may reconsider how aggressively they expand new communities.

Single-Family Rent Growth Cools: What It Means for Renters, Buyers, and Investors

After a strong start to 2025, U.S. single-family rent growth is losing momentum, signaling a potential turning point in the housing market. According to the latest data from Cotality, single-family rents in July increased 2.3% year-over-year, down from 3.1% growth a year ago. This marks the first time rent growth has dipped below the lower end of its pre-pandemic 10-year average.

“After a strong start to the year, single-family rent growth is clearly losing steam,” said Molly Boesel, senior principal economist at Cotality. “In July, we broadly saw weakening in annual single-family rent growth across metro areas and price tiers.”

Rent Growth Slows Across Markets

Month-to-month gains have cooled sharply: July rents rose just 0.2% from June, far below the typical 0.7% July increase.

Regional differences are emerging:

Chicago led the nation at 5.1% annual rent growth, thanks to tight supply and resilient demand.

New York City metro came in at 3.7%, with Philadelphia and Washington, D.C. following closely.

Los Angeles, despite past demand surges, is cooling but still ranks in the top five.

Dallas and Miami lagged, with Miami flat at 0% rent growth, a dramatic fall from its 40% pandemic-era spike in 2022.

Weakening Across Price Tiers

Rent growth is softening for both luxury and budget rentals:

High-end properties rose 2.9% YoY, down from 3.2% in July 2024.

Low-end properties rose 1.6% YoY, down from 2.8% a year earlier.

Why Rents Are Cooling

Single-family rentals had been outperforming apartments due to:

Families priced out of homeownership turning to rentals in good school districts.

Tight supply of rental homes compared to multifamily units, where new construction has surged.

However, with consumer budgets strained by inflation and higher borrowing costs, landlords are now facing pressure to moderate rent hikes.

REITs Adjusting Their Strategies

Large single-family rental REITs, such as Invitation Homes and American Homes 4 Rent, have been building new rental communities to meet demand. Yet, data from Parcl Labs shows they’ve been selling more standalone homes than buying, focusing instead on purpose-built rental neighborhoods. If rent growth continues to weaken, these REITs may slow their pace of development.

Buy vs. Rent: Which Is Better Right Now?

The cooling rental market comes at a time when buying a home is still historically expensive due to elevated mortgage rates and limited housing supply.

Renting may be the smarter choice in the near term for many families. With slowing rent growth, tenants are gaining more negotiating power, and monthly rent increases are less burdensome than a 30-year mortgage locked at today’s higher rates.

Buying remains a long-term wealth builder, but affordability is stretched. Unless rates fall or incomes rise significantly, buyers may continue to face financial strain compared to renters.

Conclusion: For now, renting looks more favorable for flexibility and affordability, especially as landlords adjust to weaker demand. However, those with stable income and the ability to handle high upfront costs may still prefer buying as a long-term investment.