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Renters are expected to see some relief from rising prices this year, with the pace of rent growth expected to slow as the market stabilizes and a measure of affordability hits a four-year-high.
An analysis by Zillow projects that multifamily rental prices are expected to remain relatively flat through the end of 2026, declining slightly by 0.2%.
Single-family rents are expected to rise at an annual rate of 1.1% in December 2026, which the report says would represent a “sharp slowdown from the rapid increases of recent years” as higher vacancy rates and more newly-built apartments help keep rent growth subdued as renters’ bargaining positions improve. Single family rents were up 2.7% last month from a year ago.
Zillow found that the typical asking rent in January was $1,895, up just 0.1% from December and 2% year over year. That represents the slowest annual rent growth since December 2020, as the market has steadied after prices saw rapid increases during the pandemic.
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Rents for multifamily homes have grown at an even slower pace, rising just 1.4% from a year ago. Zillow’s projection that multifamily rents will decline slightly and remain essentially flat this year, indicates that further relief could be on the way.
Slowing rent growth has boosted an affordability measure that takes into account renters’ income levels. A median income household would now spend 24.3% of its income on typical apartment rent, which is down slightly from 25% in February 2020.
By another measure, the typical household is spending 26.4% of its income on rent, which is the lowest share since August 2021.
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Metro areas where that figure is significantly higher than the national average include Miami (37.2%), New York City (36.9%) and Los Angeles (34%).
Notable metros with better affordability include St. Louis (19.7%), Minneapolis (19.4%), Denver (19.4%), Austin (17.9%) and Salt Lake City (17.9%).
“Renters are operating in a very different environment than they were just a few years ago,” said Orphe Dviounguy, senior economist at Zillow. “When supply expands and vacancies rise, property managers have to adjust on both price and terms. Concessions are near record highs, keeping rent growth modest and creating meaningful opportunities for renters.”
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Zillow also noted that renters are getting more concessions in lease terms as they utilize their negotiating leverage in renewals and new leases.
It found that nearly 40% of rental listings on the Zillow platform in January had at least one concession, like a free month of rent or a reduced deposit.
That’s slightly below the record high set last January, when 41.1% of listings had a concession, and the figure remains elevated compared to historical norms.
