Tariffs and Rising Construction Costs Could Signal Trouble Ahead For Rents, Despite Two Years of Price Declines

The impact is being felt across the country as the Midwest saw the steepest annual drop in completions, followed by the South. Rent prices declined for the 24th month in a row in July, marking a full two years of easing rental pressure in the U.S. rental market. At the same time, a growing pullback in multifamily development driven by rising construction costs and new tariffs on key materials like aluminum and steel is signaling potential trouble ahead for future rental supply, according to the July Realtor.com Monthly Rent Report. The median asking rent for 0–2 bedroom properties in the 50 largest metros fell to $1,712 in July, a $43 (-2.5%) decline compared to the same time last year. While monthly rent growth continues to follow a typical seasonal pattern, it has consistently lagged behind last year’s pace, indicating a persistently cooler rental market. Rent prices remain $254 (17.4%) higher than their pre-pandemic levels, but are now $47 (-2.7%) below the peak reached in August 2022. “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.” Multifamily Development Pulls Back Sharply In June 2025, multifamily completions for buildings with two or more units fell 38.1% year-over-year, dropping from a seasonally adjusted annual rate of 656,000 units in June 2024 to just 406,000. This significant decline reflects the growing challenges facing developers, including elevated construction costs, shrinking profit margins due to lower rents, and newly expanded tariffs on imported building materials. The impact is being felt unevenly across the country. The Midwest saw the steepest annual drop in completions (–55.7%), followed by the South (–33.5%), Northeast (–33.0%), and West (–28.9%). Disrupted Local Permitting Trends with New Higher Tariffs Signals More Pull Backs Ahead Permitting trends across large metro areas show that some markets are already feeling the effects from higher construction costs and compressed profits: Orlando: Permits for multifamily units dropped -54.9% from Q1 to Q2 2025—the first Q2 decline since 2022. Philadelphia and San Antonio, Texas also saw their first Q2 permitting dips in three years. Charlotte, N.C. and Las Vegas experienced their largest quarterly permitting declines in Q2 since 2022. Even San Francisco, which saw a modest increase, posted its slowest Q2 growth in permitting in three years. These local slowdowns suggest that developers are responding to worsening conditions by reducing plans for new projects—an early warning sign that the supply of new rental units could tighten over time. Looking ahead, the doubled tariffs on imported steel and aluminum announced in June could make this condition worse.   “If construction pullbacks continue, today’s renter-friendly market could give way to a tighter, more competitive landscape,” said Hale. “It’s a trend we’ll be watching closely, especially in markets that had previously led the way in multifamily development.” Table: Markets with disrupted permitting trends  Market 5 Units or More, 2025Q2 % Diff 2025q2 vs. 2025q1 % Diff 2024q2 vs. 2024q1 % Diff 2023q2 vs. 2023q1 % Diff 2022q2 vs. 2022q1 Orlando-Kissimmee-Sanford, FL 2251 -54.9% 66.9% 44.5% 12.6% Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 937 -28.1% 18.9% 27.9% 72.7% San Antonio-New Braunfels, TX 420 -27.3% 8.3% 57.7% 19.2% Charlotte-Concord-Gastonia, NC-SC 970 -54.8% 178.3% 35.6% -19.8% Las Vegas-Henderson-North Las Vegas, NV 926 -34.3% 60.7% -0.9% -15.0% San Francisco-Oakland-Fremont, CA 1346 15.9% 100.9% 85.4% 38.5% Rent Trends by Unit Size While rent prices typically rise during spring and summer, this year’s seasonal lift has been softer than usual. As of July, rents were up just 1.2% year-to-date, compared to 2.8% growth over the same period in 2024. Despite near-term affordability gains for renters, the sharp drop in multifamily completions and early signs of weakening permitting activity may shift market dynamics later this year or in 2026. Realtor.com® will continue to monitor construction trends and policy changes to track the evolving landscape for renters and developers alike. Table: National Rents by Unit Size, July 2025 Unit Size Median Rent Rent YoY Consecutive Months of Decline Total Decline from Peak Rent Change - 6 Years Overall $1,712 -2.5% 24 -2.7% 17.4% Studio $1,428 -1.4% 23 -4.0% 13.5% 1-Bedroom $1,590 -2.8% 26 -4.1% 15.6% 2-Bedroom $1,898 -2.3% 26 -3.1% 19.0% Median Asking Rent YOY Six Year Changes # Permits for Buildings with 5+ Units, 2025Q2 Atlanta-Sandy Springs-Roswell, GA 1,576 -4.3% 10.2% 2408 Austin-Round Rock-San Marcos, TX 1,460 -5.3% 15.5% 2706 Baltimore-Columbia-Towson, MD 1,827 -0.1% 15.1% 691 Birmingham, AL 1,202 -3.8% 14.2% 122 Boston-Cambridge-Newton, MA-NH 2,993 -1.5% 14.7% 1396 Buffalo-Cheektowaga, NY NA NA NA 104 Charlotte-Concord-Gastonia, NC-SC 1,519 -1.5% 15.6% 970 Chicago-Naperville-Elgin, IL-IN 1,785 -2.4% 12.7% 2270 Cincinnati, OH-KY-IN 1,312 -4.4% 15.5% 408 Cleveland, OH 1,229 -2.0% 25.5% 271 Columbus, OH 1,225 -0.6% 22.5% 3473 Dallas-Fort Worth-Arlington, TX 1,458 -2.6% 15.4% 8649 Denver-Aurora-Centennial, CO 1,783 -7.7% 7.3% 2706 Detroit-Warren-Dearborn, MI 1,297 -2.1% 11.4% 868 Hartford-West Hartford-East Hartford, CT NA NA NA 158 Houston-Pasadena-The Woodlands, TX 1,352 -3.6% 8.4% 3804 Indianapolis-Carmel-Greenwood, IN 1,298 -2.9% 30.6% 833 Jacksonville, FL 1,499 -4.3% 26.0% 804 Kansas City, MO-KS 1,404 3.2% 27.4% 1360 Las Vegas-Henderson-North Las Vegas, NV 1,471 -2.9% 22.8% 926 Los Angeles-Long Beach-Anaheim, CA 2,751 -3.2% 11.7% 3605 Louisville/Jefferson County, KY-IN 1,253 -4.9% 20.7% 940 Memphis, TN-MS-AR 1,186 -3.3% 15.0% 35 Miami-Fort Lauderdale-West Palm Beach, FL 2,332 -2.9% 36.3% 5489 Milwaukee-Waukesha, WI 1,662 -1.5% 15.5% 288 Minneapolis-St. Paul-Bloomington, MN-WI 1,514 -2.6% 3.1% 1398 Nashville-Davidson--Murfreesboro--Franklin, TN 1,531 -3.7% 22.4% 905 New Orleans-Metairie, LA NA NA NA 95 New York-Newark-Jersey City, NY-NJ 2,889 0.0% 26.0% 7166 Oklahoma City, OK 985 -2.9% 7.1% 540 Orlando-Kissimmee-Sanford, FL 1,694 -1.4% 21.8% 2251 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 1,771 -2.7% 9.1% 937 Phoenix-Mesa-Chandler, AZ 1,491 -5.4% 23.5% 3747 Pittsburgh, PA 1,490 2.3% 42.3% 340 Portland-Vancouver-Hillsboro, OR-WA 1,693 -4.5% 16.2% 946 Providence-Warwick, RI-MA NA NA NA 191 Raleigh-Cary, NC 1,498 -4.6% 24.0% 1563 Richmond, VA 1,526 -0.5% 26.2% 1016 Riverside-San Bernardino-Ontario, CA 2,040 -5.7% 14.6% 1661 Rochester, NY NA NA NA 50 Sacramento-Roseville-Folsom, CA 1,889 -3.3% 25.7% 845 St. Louis, MO-IL 1,347 -0.7% 19.5% 293 San Antonio-New Braunfels, TX 1,246 -2.6% 21.0% 420 San Diego-Chula Vista-Carlsbad, CA 2,668 -6.6% 11.1% 2636 San Francisco-Oakland-Fremont, CA 2,747 -2.4% -6.0% 1346 San Jose-Sunnyvale-Santa Clara, CA 3,442 0.9% 6.6% 474 Seattle-Tacoma-Bellevue, WA 1,999 -3.0% 6.4% 1376 Tampa-St. Petersburg-Clearwater, FL 1,741 -0.2% 39.5% 2652 Virginia Beach-Chesapeake-Norfolk, VA-NC 1,516 -2.2% 19.9% 38 Washington-Arlington-Alexandria, DC-VA-MD-WV 2,327 0.6% 16.1% 1708 Methodology Rental data as of July 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.