Rent Is Rising Fastest in These US Cities

US News Reporter

After two years of declining or flat rates, rent is back on the rise across the U.S. as a shrinking supply might be enabling landlords to increase prices, according to a new report by Redfin.

The median asking rent climbed 1.7 percent—the equivalent of $30—in July compared to a year earlier, reaching $1,790. It was the largest increase since January 2023 and the second consecutive year-over-year increase of 2025 after the one reported in June, when rent rose 0.4 percent.

Renters Stuck Between a Rock and a Hard Place

The U.S. is going through a once-in-a-generation housing affordability crisis that has pushed homeownership out of reach for millions of Americans. As a result, the renting population has grown across the country, especially in suburban areas, as renting remains more affordable than buying almost everywhere in the nation.

But rental costs also surged during the pandemic, as low supply met surging demand. Even as they have been stabilizing and even falling since reaching their peak in mid-2022, rent prices remain much higher than they were before the COVID-19 health emergency.

American tenants are stuck between a rock and a hard place: nearly half of over 21 million renter households in the country have been cost-burdened, meaning they spent more than 30 percent of their income on housing costs in 2023, according to the U.S. Census Bureau. But buying a home is not an option, as prices remain sky-high, mortgage rates are still hovering between 6 percent and 7 percent, and other costs—including home insurance premiums and property taxes—are on the rise.

Why Rents Are Rising Again

Rents are rising because the supply of rental units across the country is shrinking, according to Redfin, and possibly shifting the power toward landlords.

"Asking rents may be climbing because shrinking apartment supply is coinciding with growing renter demand, which is being fueled by the high cost of homeownership," said Redfin Senior Economist Sheharyar Bokhari in a press release.

"Rents have been sluggish for the past two years because the pandemic building boom created a surplus of supply, which left landlords scrambling to fill vacancies and gave renters negotiating power. But now a slowdown in apartment construction may be shifting the balance of power toward landlords."

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Housing Market Forecast 2025

U.S. home prices posted a 2.3% annual gain in May—the slowest annual appreciation since mid-2023—down from the 2.7% growth released in April, according to the latest S&P CoreLogic Case-Shiller Home Price Index, which tracks single-family home values and is calculated monthly using a three-month moving average. This report tracked March through May.

Despite the deceleration in price growth, the index still hit another record high, underscoring how elevated home values remain.

Still, the slowing pace of price increases, along with the ongoing rise in housing stock, would suggest that the landscape has begun shifting to a buyer’s market.

But would-be buyers aren’t biting.

Home sales remain anemic. Buyers are also backing out of sales contracts in record numbers. Redfin revealed in a 2025 analysis that nearly 15% of home purchase agreements fell through in June, the highest June reading since tracking began in 2017.

“[T]he slowdown is now more than just a story of higher mortgage rates,” said Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices, in the report. “It reflects a market recalibrating around tighter financial conditions, subdued transaction volumes and increasingly local dynamics.”

In other words, the housing market is stuck in neutral, and that’s unlikely to change in 2025.

“Home sales activity is likely to remain slow in the second half of the year and overall sales could end the year at or below last year’s historically low levels,” said Lisa Sturtevant, chief economist at real estate agency Bright MLS, in emailed commentary.

Will the Housing Market Crash in 2025?

With record-high home prices still trending upward in many markets amid economic uncertainty, you may be concerned that we’re in a bubble that’s primed to pop, as it did in the 2008 financial crisis. However, the likelihood of a housing market crash (a rapid drop in unsustainably high home prices due to waning demand) remains low in 2025.

Housing stock supply has risen substantially compared to last year, yet overall inventory is still well below pre-pandemic levels.

“[T]he record low supply of houses on the market protects against a market crash,” says Tom Hutchens, executive vice president of production at Angel Oak Mortgage Solutions, a nonqualified mortgage lender.

Experts are also quick to point out that today’s homeowners are on much more secure footing than those coming out of the 2008 financial crisis, with many having substantial home equity. What’s more, a record number of homeowners today are mortgage-free.

When Will the Housing Market Recover?

At a minimum, for a housing recovery to occur, two primary conditions must improve.

Housing Inventory Needs To Increase

“For the best possible outcome, we’d first need to see inventories of homes for sale turn considerably higher,” Keith Gumbinger, vice president at online mortgage company HSH.com, tells Forbes Advisor. “This additional inventory, in turn, would ease the upward pressure on home prices, leveling them off or perhaps helping them to settle back somewhat from peak or near-peak levels.”

Mortgage Rates Need To Fall

Additionally, mortgage rates need to decline to see a meaningful increase in housing market activity. However, with rates firmly stuck above 6.5% for nine months, hopes are dwindling for much improvement over the remainder of the year.

Meanwhile, in a widely expected move, the Federal Reserve left its benchmark interest rate unchanged at its July meeting. Many watchers anticipate a rate cut in September, which could indirectly influence a drop in mortgage rates ahead of the decision, much like what happened in the lead-up to the September 2024 meeting when rates declined in anticipation of the Fed rate cut.

Still, with so much economic uncertainty and political noise, the Fed’s next move remains difficult to predict.

So, what do most experts feel certain about? Whatever the Fed does, don’t expect a steep drop in mortgage rates—but that’s a good thing.

Gumbinger warns that rates cooling too quickly could create a surge in demand that would wipe away any inventory gains, causing home prices to spike. He adds that mortgage rates eventually returning to a more “normal” upper-4%-to-lower-5% range would be helpful to the housing market, but predicts it could be a while before we return to those rates.

……continue reading at https://www.forbes.com/advisor/mortgages/real-estate/housing-market-predictions