Apartment rent growth across the United States eased for the first time in over a year in the second quarter as surging construction gave renters more choices and made it harder for landlords to raise rates.
Year-over-year multifamily asking rents rose just 0.9% in the three months ended June 30, according to a report from Apartments.com, owned by CoStar Group. That was a drop from the 1.2% asking rent growth in the first quarter.
Rent growth has not declined from one quarter to the next since the first three months of 2024, according to the report.
”The surge of new developments in lease-up has increased competition for renters and stymied rent growth,” said Jesse Gundersheim, CoStar senior director of market analytics. “The new developments are performing well and attracting tenants — at times away from older properties — by offering free rent.”
The newest luxury apartment buildings have seen rent growth accelerate at a 1.8% annual pace over the past two years, Gundersheim said. However, the luxury segment accounts for only about 2.5% of total apartment supply nationally, and rent growth slowed in the second quarter across the vast majority of more moderately priced and affordable rentals, he added.
Among cities, San Francisco ended the quarter with the strongest annual asking rent growth among the nation's top 50 markets, posting an increase of 5.1% in the second quarter.
Gundersheim said a return of population growth and business expansion — led by San Francisco's rapidly growing artificial intelligence sector and a more vibrant downtown — has increased renter demand.
The Midwest again posted the nation's strongest rent growth by region, led by Chicago at 3.8%, followed by the Northeast, led by such cities as Boston at 1.5%.
The national average on a monthly rent-per-unit basis ended the second quarter at $1,773, compared to $1,763 at the end of the first quarter and $1,757 at the end of the second quarter of 2024, according to the report.
Quarter-over-quarter rents rose 0.6%, a slowdown from the prior quarter’s gain of 1.1%. The vacancy rate held steady at 8.2% for the third consecutive quarter.