In 2025, the U.S. housing market is poised for a significant shift, with single-family housing starts expected to rise by 13.8%, reaching a total of 1.1 million new homes, according to Realtor.com data. This increase in housing supply could lead to a temporary renter's market, offering a window of opportunity for renters to secure affordable deals. The median asking rent price in the U.S. was recorded at $1,695 in December, reflecting a decrease of 0.5% from November and a 1.1% reduction from the previous year.
Daryl Fairweather, chief economist at Redfin, noted the temporary nature of this renter's market, emphasizing that it may not last beyond this year due to slowed multifamily construction permitting. Builders are expected to redirect their focus towards constructing more homes for sale, potentially curtailing the availability of rental units. Fairweather warns that the construction boom might soon conclude, leading to potential rent increases.
"We're calling it a renter's market. We think that's going to continue for the next year," Daryl Fairweather, chief economist at Redfin, recently told CNBC.
The current decrease in rent prices is also attributed to broader market trends. As of December, rents were 3.7% lower than their peak in July 2022. This trend may be further influenced by the fact that nearly a third of construction tradesmen in the U.S. in 2022 were immigrants, as reported by the National Association of Home Builders (NAHB). Any disruption in immigrant labor could have significant ramifications on the construction industry.
"Anything that threatens to disrupt the flow of immigrant labor will send shock waves to the labor market in home construction." – Jim Tobin, president and CEO of the NAHB
Austin, Texas, stands out as one of the most affordable metros for renters, where typical renters earn an annual income of $69,781 — a figure 25.14% higher than the estimated $55,760 required to afford a typical apartment there, according to Redfin. This makes Austin a prime location for renters looking to maximize their financial advantage.
"Pay attention to how things are changing market to market and where you know you can make your money go the furthest," Berner said.
As builders redirect their efforts towards the for-sale market, construction companies face uncertainties that might affect rental availability. According to Berner, building multifamily housing is not currently profitable due to low returns and rising costs for builders. This economic landscape suggests that tenant turnover could become increasingly costly for landlords if properties remain unoccupied for extended periods.
"This construction boom is probably going to be over and rents will probably start going up again," Fairweather said.
For those currently navigating the rental market or planning to enter it this year, experts advocate for strategic actions to capitalize on current conditions. Renters in areas where prices have been declining might consider negotiating with landlords or property managers for a reduced rent in exchange for signing multiyear leases.
"If you're in an area where prices have been coming down, you could tell your landlord or property manager you're interested in signing a multiyear lease if they reduce the rent price," Berner said.
"If you're a renter who intends to become a homeowner, this is a good time to save on rent," Berner said — and then bank the difference for your down payment.
Renters who manage to lower their monthly costs might consider saving any surplus funds for future homeownership opportunities.
"The larger your down payment can be, the better." – Berner