Fewer Multifamily Permits Today Could Mean Costlier Rents Ahead
Rhea-AI Summary
Realtor.com's February rent report reveals that despite declining rents in top 50 metros, lower multifamily permitting activity could lead to future rent increases. Only 294,000 multifamily units were permitted in 2024, down from 318,000 during the pandemic peak in 2020.
Nine metros, including New York, Kansas City, and Detroit, showed lower multifamily permitting and rising rents. Conversely, cities like Birmingham, Cincinnati, and Cleveland saw increased permitting and declining rents. In federal employment hotspots, rent trends vary, with Washington D.C. up 3.3% year-over-year, while San Diego experienced a 6% decline.
The report highlights that larger rental units maintain strong demand, with 2-bedroom units showing 18.3% growth over five years, compared to 14.3% for 1-bedroom and 9.7% for studio units. Currently, all unit types show slight year-over-year declines around -0.7% to -0.8% as of February 2025.
Positive
- Larger rental units show strong long-term growth with 2-bedroom units up 18.3% over 5 years
- Some markets like Birmingham show healthy supply growth with 22.1% increase in permits
- Federal employment centers maintain stable rental demand with Washington D.C. up 3.3% YoY
Negative
- Multifamily permits dropped to 294,000 units in 2024, below pandemic peak of 318,000
- Nine major metros face supply constraints due to lower permitting activity
- National housing shortage of 3.8 million homes could pressure future rent growth
- Current rental market shows declining rates across all unit types (-0.7% to -0.8% YoY)
Insights
Realtor.com's February rent report reveals a potential inflection point in the rental market that could benefit News Corp's digital real estate services segment. After 19 consecutive months of declining rents across top 50 metros, the significant drop in multifamily permitting activity (294,000 units in 2024 vs. 318,000 during pandemic peak) signals future supply constraints that could reverse the rental price trajectory.
The report identifies nine major metros including New York, Washington D.C., and Boston already experiencing rent increases despite lower permitting activity - creating a leading indicator of markets where Realtor.com could see increased listing activity and potential revenue growth. Conversely, markets with higher permitting levels like Birmingham (-5.4% YoY rent) show continued downward pressure on rents.
For News Corp investors, this data represents valuable market intelligence from their Realtor.com subsidiary demonstrating the platform's analytical capabilities while highlighting potential growth opportunities. The identified trend of sustained demand for larger rental units (2-bedrooms showing 18.3% five-year growth vs. 9.7% for studios) further supports Realtor.com's value proposition as renters stay put longer in the current high-rate environment.
This market analysis strengthens NWSA's position as a data-driven leader in digital real estate services, potentially supporting user engagement and advertiser value across their platforms.
This report highlights a important supply-demand imbalance developing in the rental market that carries mixed implications for News Corp's digital real estate portfolio. The 3.8 million home shortage cited by Realtor.com combined with the notable decline in multifamily permitting creates conditions for a potential rental price rebound – especially in supply-constrained markets.
The data reveals a clear correlation between permitting activity and rent trajectories across major metros. Markets like Detroit showing both restricted supply and rising rents represent prime areas where News Corp's platforms could capitalize on increased listing views, higher user engagement, and stronger advertiser interest. The report effectively validates Realtor.com's data infrastructure and analytical capabilities.
Particularly noteworthy is the sustained demand for larger rental units, with 2-bedroom units maintaining 18.3% five-year growth compared to studios at 9.7%. This extended tenant lifecycle directly benefits News Corp's digital platforms through longer listing durations and customer retention.
While current rent trends appear negative (-0.7% YoY for 1-2 bedrooms), the permitting data suggests this represents a temporary phase rather than a secular trend. For News Corp, this positions their digital real estate services for potential growth as the rental market reaches an inflection point, providing a valuable competitive edge through Realtor.com's comprehensive market intelligence.
- Rent jumps are expected in: New York, N.Y.,
Kansas City, Mo. ,Detroit, Mich. ,Washington D.C. ,San Jose, Calif. ,Baltimore, Md. ,Boston ,St. Louis andCharlotte, N.C. - Federal employment hot spots show no sign of meaningful impact from federal layoffs… yet
"During the pandemic, rent prices surged significantly. While there has been a gradual correction, the current trend of declining rents over the past 19 months and a still-sizable number of multi-family units under construction have impacted builders' enthusiasm for new projects," said Danielle Hale, Chief Economist of Realtor.com®. "The nation is short 3.8 million homes according to Realtor.com® research. As builders attempt to right-size their construction pipelines amid shifting economic and policy cross currents, multifamily builders nationwide have made headway, evidenced by vacancy rates trending up. Still, the shortfall varies by market and region. The low level of permitting for multifamily housing, particularly in markets where rents are still climbing, may become a catalyst for future rent growth."
When Supply is in a Pinch, Rent Will Rise
In hot markets where demand is high, and rent is already growing, low levels of multifamily housing permitting will cause further supply constraints and could make rents go up even higher in the future. For nine of the top 50 metros, multifamily permitting was lower than recent history in 2024, and these places experienced a rise in rent, including
Hot Markets Where Rent is Poised To Grow as Permits Decline | ||
Metro | Rent Increase | Multifamily Permits vs 5-year Baseline |
6.80 % | -9.50 % | |
6.00 % | -6.00 % | |
3.60 % | -11.60 % | |
3.30 % | -35.00 % | |
1.30 % | -51.00 % | |
1.20 % | -22.60 % | |
0.70 % | -22.30 % | |
0.30 % | -27.30 % | |
0.20 % | -19.00 % | |
On the other hand, nine of the top 50 metros saw more multifamily permitting in 2024 than over the previous five years and experienced rent price declines YoY including
Federal Layoffs Haven't Affected Rent Prices…Yet
While data shows changes starting to happen in the for-sale markets of the major metros where federal employment is high, the rental shifts in these markets are relatively varied and show no meaningful changes, yet. Within the five major metros with the highest concentration of federally-employed workers rent is up
Larger Rental Units Maintain Demand as Renters Stay Put
As fewer renters turn into first-time home buyers, demand for larger rental units remains high, with 2-bedroom units seeing the most long-term rent growth over the last five years, at
While studio units tend to experience more volatility in activity, this month rent growth for studio units dipped slightly at -
National Rental Data – February 2025 | |||
Unit Size | Median Rent | Rent YoY | Rent Change - 5 Years |
Overall | -0.9 % | 14.4 % | |
Studio | -0.8 % | 9.7 % | |
1-Bedroom | -0.7 % | 14.3 % | |
2-Bedroom | -0.7 % | 18.3 % | |
50 Largest Metropolitan Areas – February 2025 | ||||
Metro | Median | YoY | Multifamily | Multifamily |
1,573 | -2.6 % | 13937 | 31.5 % | |
1,462 | -4.8 % | 15008 | -26.5 % | |
1,795 | 1.2 % | 2425 | -22.6 % | |
1,165 | -5.4 % | 556 | 22.1 % | |
2,936 | 0.7 % | 7022 | -22.3 % | |
NA | NA | 563 | 18.2 % | |
1,520 | 0.2 % | 6847 | -19.0 % | |
1,776 | -2.1 % | 7403 | 1.4 % | |
1,293 | -3.3 % | 2534 | 29.9 % | |
1,170 | -3.0 % | 720 | 37.9 % | |
1,198 | 1.1 % | 7195 | 32.7 % | |
1,461 | -2.0 % | 22912 | -6.6 % | |
1,773 | -6.4 % | 6505 | -41.8 % | |
1,320 | 3.6 % | 2023 | -11.6 % | |
NA | NA | 1488 | 89.2 % | |
1,368 | -0.9 % | 11520 | -44.3 % | |
1,284 | -2.1 % | 2314 | -32.5 % | |
1,508 | -1.3 % | 1753 | -69.6 % | |
1,370 | 6.0 % | 3663 | -6.0 % | |
1,448 | -2.4 % | 2301 | -29.7 % | |
2,715 | -2.5 % | 13265 | -25.7 % | |
1,223 | -1.2 % | 1854 | -10.0 % | |
1,184 | -1.4 % | 1089 | 39.5 % | |
2,319 | -2.2 % | 10035 | -28.6 % | |
1,642 | 1.3 % | 1884 | 101.3 % | |
1,498 | -0.2 % | 5055 | -59.6 % | |
1,525 | -1.7 % | 5384 | -52.0 % | |
NA | NA | 287 | -47.3 % | |
2,977 | 6.8 % | 42230 | -9.5 % | |
1,027 | 2.0 % | 581 | 90.4 % | |
1,673 | 0.0 % | 8210 | -18.8 % | |
1,751 | -0.3 % | 5054 | -49.4 % | |
1,492 | -3.1 % | 13577 | -13.9 % | |
1,440 | 0.6 % | 1738 | 2.3 % | |
1,649 | -2.7 % | 2696 | -58.5 % | |
NA | NA | 656 | 175.4 % | |
1,458 | -3.5 % | 5574 | -12.8 % | |
1,477 | 0.0 % | 3408 | -14.0 % | |
2,071 | -3.6 % | 3012 | -20.9 % | |
NA | NA | 750 | -8.9 % | |
1,883 | -0.2 % | 2701 | -8.2 % | |
1,240 | -1.3 % | 3803 | -54.1 % | |
2,667 | -6.0 % | 7244 | 18.8 % | |
2,678 | -3.3 % | 2929 | -60.4 % | |
3,300 | 1.3 % | 1886 | -51.0 % | |
1,957 | -0.8 % | 9880 | -36.1 % | |
1,304 | 0.3 % | 1821 | -27.3 % | |
1,739 | -0.4 % | 7545 | -9.0 % | |
1,487 | -1.5 % | 1250 | -42.8 % | |
2,283 | 3.3 % | 9680 | -35.0 % | |
Methodology
Rental data as of January 2025 for studio, 1-bedroom, or 2-bedroom units advertised as for-rent on Realtor.com. Rental units include apartments as well as private rentals (condos, townhomes, single-family homes). We use rental sources that reliably report data each month within the 50 largest metropolitan areas. Realtor.com began publishing regular monthly rental trends reports in October 2020 with data history stretching back to March 2019. Construction permitting data comes from the Census Bureau Building Permits Survey.
About Realtor.com®
Realtor.com® pioneered online real estate and has been at the forefront for over 25 years, connecting buyers, sellers, and renters with trusted insights, professional guidance and powerful tools to help them find their perfect home. Recognized as the No. 1 site trusted by real estate professionals, Realtor.com® is a valued partner, delivering consumer connections and a robust suite of marketing tools to support business growth. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc.
Media Contact: Asees Singh, press@realtor.com
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SOURCE Realtor.com
FAQ
What is the current multifamily permitting trend for NWSA markets in 2024?
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How have different rental unit sizes performed over the past 5 years?
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How are rents trending in federal employment hotspots?
