Tariffs, Rising Construction Costs Could Push Rents Higher

U.S. rent prices declined for the 24th consecutive month in July, but a sharp pullback in multifamily construction and new tariffs on building materials could limit future supply, according to Realtor.com’s July Monthly Rent Report.

The median asking rent for 0- to 2-bedroom properties in the 50 largest metros was $1,712 in July, down $43 — or 2.5% — from a year earlier.

Rents are now $47, or 2.7%, below the August 2022 peak but remain $254, or 17.4%, above pre-pandemic levels.

“Rents have now declined for two full years, giving renters more leverage and financial breathing room than they’ve had in some time,” said Danielle Hale, chief economist at Realtor.com. “But there are early signs that relief may not last forever. Developers are pulling back in key markets, and construction headwinds — especially tariffs on steel, lumber and aluminum — could create a shortfall in new rental supply down the line.”

In June, completions for multifamily buildings with two or more units fell 38.1% from a year earlier, dropping from a seasonally adjusted annual rate of 656,000 units in June 2024 to 406,000.

The Midwest recorded the largest decline at 55.7%, followed by the South (33.5%), Northeast (33.0%) and West (28.9%).

Permitting activity has also slowed in several large metro areas:

• Orlando, Fla., saw permits for multifamily units drop 54.9% from the first to second quarter of 2025, its first second-quarter decline since 2022.
• Philadelphia and San Antonio each saw their first second-quarter permitting dips in three years.
• Charlotte, N.C., and Las Vegas posted their steepest quarterly declines since 2022.
• San Francisco had modest growth, but it was the slowest second-quarter increase in three years.

“If construction pullbacks continue, today’s renter-friendly market could give way to a tighter, more competitive landscape,” Hale said.

While rents typically rise in spring and summer, this year’s seasonal lift has been muted. Rents rose 1.2% from January through July, compared to 2.8% over the same period last year.

The full report can be found here.