Rent Inflation Explained: Why Rents Keep Rising

The Supply-Demand Imbalance

At its core, rent inflation is a supply-and-demand story. When more people want to rent than there are rental units available, landlords can charge more. The United States has been underbuilding housing relative to population growth and household formation for over a decade.

Various estimates place the national housing shortfall between 3 and 7 million units. The National Association of Realtors estimates a gap of about 5.5 million homes. Freddie Mac's estimate is around 3.8 million. Regardless of the exact number, the direction is clear: we haven't built enough.

This shortfall didn't happen overnight. After the 2008 financial crisis, housing construction collapsed and took years to recover. Annual housing starts dropped from 2.1 million in 2005 to 554,000 in 2009. Even as the economy recovered, construction didn't return to pre-crisis levels until the 2020s, and by then, a decade of underbuilding had created a structural deficit.

You can see the effects of supply constraints in Fair Market Rent data. Areas with the most restrictive zoning and least new construction tend to have the highest FMRs and the steepest year-over-year increases. Compare state-level FMR data to see the variation.

What Drives Construction Costs Up

Even when developers want to build, the cost of construction has risen significantly, which ultimately feeds into higher rents:

• Labor shortages. The construction workforce shrank after 2008 and has not fully recovered. The Bureau of Labor Statistics estimates the construction industry had over 370,000 unfilled positions as of 2024. Higher labor costs get passed through to rents.
• Materials costs. Lumber, concrete, steel, and other building materials saw sharp price increases during and after the pandemic. While some have moderated, they remain above pre-2020 levels. Tariffs on imported materials have added additional pressure.
• Land costs. In desirable metro areas, land suitable for development has become increasingly scarce and expensive. Land costs can represent 20-40% of a new development's total budget in expensive markets.
• Regulatory costs. Environmental reviews, impact fees, permitting timelines, and building code requirements vary by jurisdiction but have generally increased over time. In some California cities, fees and delays can add $100,000+ per unit to development costs.

The result: it's expensive to build new housing, which means new apartments need to charge high rents to be financially viable. This is why most new construction targets the luxury end of the market, affordable new construction is nearly impossible without subsidies.

The Zoning Problem

Zoning laws, the local regulations that determine what can be built where, are arguably the single biggest structural driver of high rents. In much of America, it's illegal to build anything other than single-family homes on the majority of residential land.

This matters because single-family zoning artificially limits housing density. An acre that could support 20 apartment units instead holds 3-4 houses. The math is straightforward: when less housing can be built on available land, supply can't grow to meet demand, and rents rise.

Several states and cities have begun zoning reforms:

• Oregon (2019) effectively banned single-family-only zoning in cities, allowing duplexes on most residential lots.
• Minneapolis (2018) eliminated single-family zoning citywide, allowing triplexes in all residential neighborhoods.
• California has passed a series of bills (SB 9, SB 10, AB 2011) making it easier to build denser housing and convert commercial properties to residential.
• Montana, Washington, and Vermont have also enacted significant zoning reforms.

Where these reforms have been implemented long enough to see results, housing supply has increased and rent growth has moderated compared to similar areas without reforms.

Migration and Remote Work

The pandemic accelerated a migration trend that was already underway: movement from expensive coastal metros to more affordable Sun Belt and interior cities. This shift has had dramatic effects on local rental markets.

Cities like Austin, Boise, Phoenix, Tampa, and Raleigh saw enormous influxes of new residents between 2020 and 2023, driving rents up 30-60% in some cases. These migrants often brought higher incomes from their origin cities, enabling them to outbid local renters.

Remote work has been the key enabler. When location no longer determines income, high earners have strong incentives to move to lower-cost areas. This is great for the individual worker but can strain housing markets in destination cities that weren't built for rapid population growth.

The effect is visible in FMR data. Metro areas that received the most inbound migration tend to show the largest year-over-year FMR increases. Check our rent growth rankings to see which areas have experienced the steepest increases.

The Pandemic Effect: A Timeline

The pandemic created a unique whipsaw in rental markets:

2020 (early pandemic): Rents actually fell in many dense urban cores. New York, San Francisco, Boston, and other expensive cities saw significant rent declines (10-25%) as remote workers fled to suburbs, smaller cities, or their home states. Vacancy rates in these cities spiked.

2021-2022 (recovery and surge): As the economy reopened, rental demand surged, fueled by pandemic savings, stimulus money, and a wave of young adults forming households. Supply hadn't kept up (construction was delayed by supply chain disruptions), and rents soared nationally. Year-over-year rent increases reached 15-18% in some markets.

2023-2024 (moderation): New apartment construction, much of it started during the boom, began delivering units. National rent growth decelerated to 2-4% annually. Some overbuilt markets (Austin, Phoenix, Atlanta) saw flat or declining rents.

2025-2026 (normalization): Rent growth has largely normalized to 2-5% in most markets. However, the pandemic-era price increases are permanent in most places, rents have reset at a higher base. The question is the rate of increase going forward, not whether prices will return to 2019 levels.

FMR Year-Over-Year: What the Data Shows

HUD's Fair Market Rent data captures rent inflation with a deliberate lag. Because FMRs are based on survey data that is 1-2 years old (adjusted with trend factors), they smooth out short-term volatility but reliably show medium-term trends.

Between FY 2022 and FY 2026, national average two-bedroom FMRs increased substantially. The pattern varies significantly by region:

• Fastest-growing FMRs: Sun Belt metros that saw rapid migration, Miami, Tampa, Nashville, Charlotte, and similar markets showed FMR increases of 8-15% in peak years.
• Slowest-growing FMRs: Older Midwest and Northeast cities with flat or declining populations, Detroit, Cleveland, Pittsburgh, showed more modest FMR growth of 2-5% per year.
• Declining FMRs: A handful of areas with significant new supply or population loss have seen FMRs actually decline year-over-year, though this is uncommon.

Browse our county pages and metro pages to see how FMRs in your area have changed. Year-over-year comparisons are available where data exists for multiple years.

What Renters Can Do

Individual renters can't solve the housing supply crisis, but there are practical steps to manage the impact of rising rents:

• Negotiate at renewal. Landlords prefer to keep good tenants rather than deal with vacancy and turnover costs (typically 1-2 months of lost rent plus cleaning/repairs). If your rent is being raised, ask for a smaller increase, especially if you've been a reliable tenant.
• Know your local protections. Some cities and states have rent stabilization laws, just-cause eviction protections, or relocation assistance requirements. Know what applies to you.
• Consider slightly less trendy neighborhoods. Rent gradients within a metro can be steep. Moving one or two neighborhoods away from the hottest areas can save 20-30% on rent with minimal lifestyle impact.
• Time your lease strategically. Rents tend to be highest when demand peaks (typically May-September). Leases starting in winter months often come at lower rates.
• Look at FMR data for alternatives. If your area's FMR is well above what you can afford, explore nearby counties or metros with lower FMRs. Even short commute-distance differences can mean significant savings.
• Support housing supply. At a community level, supporting zoning reforms and new housing construction, even if a specific project isn't in your neighborhood, is the most effective long-term response to rent inflation.

For a deeper look at which states offer the most affordable rents, read our guide on the cheapest states to rent in 2026. If you're considering Section 8 assistance, learn how housing vouchers interact with FMR in your area.

Frequently Asked Questions

Why do rents keep going up?

Rents rise when demand for housing grows faster than supply. The main drivers are population growth and household formation outpacing new construction, rising construction costs (labor, materials, land), zoning restrictions that limit new building, and migration to high-demand metro areas. Between 2019 and 2024, national median rent rose roughly 25-30%.

How much have rents increased over the past 5 years?

National median rent rose approximately 25-35% from 2019 to 2024, though the increase was highly uneven. Sun Belt cities like Phoenix, Tampa, and Miami saw increases of 40-60% at their peak, while some Midwest cities saw more modest growth of 10-20%. As of 2025-2026, rent growth has moderated significantly and some markets have seen slight declines.

Will rents go down in 2026?

In some markets, yes. Cities with large amounts of new apartment construction, like Austin, Phoenix, and parts of the Southeast, are seeing flat or declining rents as supply catches up with demand. However, in supply-constrained coastal markets and areas with strong job growth, rents are likely to continue rising, though at a slower pace than 2021-2023.

Does rent control work to keep rents affordable?

Rent control is debated among economists. It benefits existing tenants by limiting rent increases, but most research suggests it reduces housing supply over time by discouraging new construction and maintenance of existing units. Many economists advocate for increasing housing supply through zoning reform as a more effective long-term solution.

How does FMR reflect rent inflation?

HUD's Fair Market Rent is updated annually and incorporates CPI rent data and local market trends, so it does reflect rent inflation, but with a lag. Because FMR calculations use American Community Survey data that is 1-2 years old, FMRs may understate current rents in rapidly appreciating markets and overstate them in cooling markets. You can track year-over-year FMR changes on PlainRent's rankings pages.