R
ent prices across the US have finally begun to ease, with a 19th consecutive month of decline. However, this welcome respite may be short-lived as a looming construction shortage threatens to disrupt the market.

    According to Realtor.com's February 2025 Rental Report, the median asking rent price for the 50 largest metros has dropped to $1,691, a decrease of $15 from the same time last year. While this decline is a positive sign, it's essential to note that renters are still paying significantly more than they were before the COVID-19 pandemic.

    The decreasing rental rates have made building multifamily housing less appealing to investors, leading to a significant drop in construction permits. In 2024, fewer than 294,000 units were permitted for construction across the 50 largest metros, the lowest number since 2017. This decline is expected to result in lower rental unit inventory and potentially higher rent prices in the future.

    New York City stands out as an exception, with a median rent of $2,977, up nearly 7% from last year. The city's high demand and limited supply have driven up prices, making it one of the most expensive metros in the US.

    In contrast, some regions are experiencing higher inventory and lower rents. San Diego, Denver, and Birmingham, AL, have seen significant drops in their average monthly rates, with San Diego's rate plummeting by 6% to $2,667. These cities' increased construction permitting has contributed to the decline in rent prices.

    Studio units have had the smallest rent growth from five years ago, at 9.7%, while two-bedroom apartments have seen a steeper uptick in rents, at 18.3%. This trend may be attributed to fewer young renters becoming first-time homebuyers and more people living with roommates instead of forming independent households.

    The top 10 metros where rent prices have fallen the most include Denver, CO; San Diego, CA; Birmingham, AL; Austin, TX; Riverside, CA; Raleigh, NC; Cincinnati, OH; San Francisco, CA; Phoenix, AZ; and Cleveland, OH. These cities' median monthly rents have decreased by as much as 6.4% in Denver and 5.4% in Birmingham.

    As the construction shortage looms, renters may face higher rent prices in the future. However, some regions are experiencing a boost in multifamily permitting, which could lead to more significant downward pressure on rents.