Rental Growth Dips in May, Falling in Line With For-Sale Market

Growth in new rental inventory and a more buyer-friendly housing market have helped to cool rental rates slightly in May. According to data from real estate marketing platform Zillow, the typical asking rent increased to $2,049, rising by 0.4% from April and up 3.2% from May 2024. Comparatively, rents in April were 3.4% higher than a year ago and 0.6% higher than March’s rates.

For single-family rentals, growth was slightly higher. Single-family rental rates grew by 3.8% year-over-year but by just 0.3% over the past month. Since the beginning of the pandemic, single-family rents have increased by 43.2%, compared with the 35.8% rate of growth experienced by the rental market overall during this time.

Rents tend to follow home prices. The increase in housing inventory both in the for-sale and rental markets means renters have more bargaining power than they have had in a long time for this time of year, whether they’re across the table from a home seller or a property manager.

In recent years, elevated home prices and mortgage rates have pushed many would-be buyers toward renting a starter home. As an alternative to homeownership, many renters enjoy the space and lifestyle of a single-family home without the long-term commitment.

Rent costs for a single-family home are still cheaper than a monthly mortgage payment. However, lower mortgage rates and slower price growth on the for-sale side, combined with steep growth in single-family rents, have cut the purchase premium (before taxes and insurance) in half over the past year.