Single-Family Rent Growth Slows After Strong Start in 2025
Single-family home rents, which had shown robust growth in the first half of 2025, experienced a notable slowdown in July. According to data from Cotality, year-over-year rent growth decelerated to 2.3% in July, down from 3.1% a year earlier. This decline places rent growth below the lower bound of the 10-year pre-pandemic average, indicating a cooling market. Molly Boesel, senior principal economist at Cotality, highlighted the broad weakening trend: “After a strong start to the year, single-family rent growth is clearly losing steam. In July, we broadly saw weakening in annual single-family rent growth across metro areas and price tiers.”Monthly Growth Trends Highlight Market Softening
Monthly rent growth in July registered only 0.2%, significantly below the historical July average of 0.7%. Earlier in the year, monthly increases had consistently surpassed typical levels, marking a shift in momentum.“Even markets like Los Angeles, which had been buoyed by post-wildfire demand, are now cooling off. Chicago stands out as the exception, leading the nation in rent growth amid tight inventory and resilient demand,” Boesel noted.
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Metro Market Variations: Leaders and Laggards
Among the 10 largest metropolitan markets, Chicago led rent growth at 5.1%, followed by the New York City metro area at 3.7%. Philadelphia and Washington, D.C., also posted solid gains. While Los Angeles’ growth slowed, it remained within the top five. Conversely, Miami and Dallas ranked lowest, with Miami registering no rent growth in July. This contrasts sharply with 2022, when Miami’s rents surged 40% annually, fueled by pandemic-driven migration to the South.Weakening Across Price Tiers
Rent growth slowed across all price segments. High-end single-family rents increased 2.9% year-over-year in July, down from 3.2% the previous July. Low-end rents rose 1.6%, a steep decline from 2.8% growth a year earlier.Market Context: Supply, Demand, and Rental REIT Adjustments
Single-family rentals have outperformed apartments in recent years, driven by limited multifamily supply and soaring home prices pushing families towards rentals, especially in quality school districts. Large single-family rental REITs such as Invitation Homes and American Homes 4 Rent have expanded rental communities to meet demand. However, recent data suggest these REITs are shifting strategies, selling more homes than they acquire to consolidate holdings into larger rental communities rather than standalone properties. Monitoring how these REITs respond to the rent growth slowdown will be key for market participants.FinOracleAI — Market View
The deceleration in single-family rent growth in mid-2025 signals a market adjusting to consumer affordability constraints and evolving demand patterns. While growth remains positive, the weakening trend across metros and price tiers suggests landlords and investors may need to recalibrate expectations and strategies.- Opportunities: Strategic expansion of rental communities, focus on high-demand metros like Chicago, and potential for value-add renovations to attract tenants.
- Risks: Prolonged rent growth deceleration could pressure rental REIT valuations and reduce investor returns.
- Market Watch: Close attention to regional variations and consumer income trends will be critical for forecasting rental market dynamics.
