For the last few years, rent growth has quietly done a lot of the heavy lifting for multifamily investors. Even if you overpaid a little or your expenses ran high, strong rent growth could bail you out.
That’s no longer something we can assume.
National data is now showing clear signs that rent growth has cooled — and in most markets, rents are declining.
The question isn’t whether that’s happening. The question is what it means.
RENTS ARE DROPPING
According to recent reports from Redfin, the median U.S. asking rent has declined year-over-year in multiple recent months. Markets like Austin, Phoenix, Tampa and Nashville have posted rent declines between 3% and 7% year-over-year.
Zillow’s Observed Rent Index (ZORI) shows a similar trend. After peaking at roughly 16% annual rent growth during 2021–2022, national rent growth has slowed dramatically — now closer to 3–4%, with some markets showing flat or slightly negative monthly changes.
Meanwhile, the U.S. Bureau of Labor Statistics shows CPI rent inflation cooling from nearly 9% at its peak to closer to 4% today.
Anecdotally, we’re seeing the same shift in our units in New Hampshire. We’re not able to raise rents like we were in the past. Our focus right now is maintaining existing tenants at existing rents.
This is not a crash. But it is a shift.
WHY ARE THEY DROPPING?
1. Supply
Data from the U.S. Census Bureau shows that over 450,000 multifamily units were delivered nationally in 2024 — the highest level of completions in roughly 40–50 years.
These projects were financed in 2021–2022 when rates were near zero and capital was abundant. They’re delivering now into a very different interest rate environment.
That new supply is putting downward pressure on rents in markets that built aggressively.
2. Affordability Ceilings
Wage growth hasn’t kept pace with housing costs. Generally we look for someone’s annual salary to be 3x their annual rent. Rent has been increasing faster than salaries, so people who have been paying for rents at the top end of what they have been able to afford are now seeing rents increase faster than their salary has increased which is lowering the number of qualified buyers or demand.
There’s simply a limit to how much renters can absorb.
LET’S TALK NEW HAMPSHIRE
New Hampshire did not experience the same overbuilding cycle that markets like Austin or Phoenix did.
From 2016 to 2024, housing inventory in New Hampshire fell dramatically — from over 8,000 homes on the market during peak 2016 months to roughly 2,500 in 2024 (per the New Hampshire Association of Realtors). That’s a structural supply issue, not a cyclical one.
- Permitting remains difficult
- Construction costs remain high
- Land is limited
Although there were some major developments, we didn’t build 20,000 units in Manchester.
So while national data shows rent softness, local supply constraints still act as a stabilizer.
That said, you’d probably be smart to buy properties over the next few years but you cannot expect 8–10% rent growth to bail you out. Underwriting should be assuming:
- A higher vacancy rate than you’ve been experiencingfor the past few years
- Lower rent increase than you have been experiencingfor the previous months
- Cash flow positive with today’s rates. Even if it’s not your plan, you should be able to hold your property for years if prices take a dip temporarily
The market needs time to let national inflation catch back up to the rents. It will happen but it’s likely to look like flat or slightly decreasing rents for a few years while we see 2-5% inflation.