What’s happening to the cost of rent in the United States?

Americans faced surging rental costs in the immediate aftermath of the pandemic. Since then, the cities and regions that have built the most houses have managed to bring prices under control. But in places where housing supply remains low, rents have continued to spiral.

Since the Covid-19 pandemic, the United States has faced a once-in-a-generation crisis of housing affordability. In mid-2022, a typical American renter devoted a greater share of their income to rent than at any point this century. Putting a roof over your head had never been so expensive.

Figure 1 shows median gross rent as a share of household income by US county. The size of the bubbles represents each county’s 2020 population, and the colour – graded from blue to red – shows the price of rent as a share of income. Households that pay more than 30% of their income on rent are considered ‘rent-burdened’.

A typical renter is near or above this threshold in all of America's population centres (that is, the large bubbles). Median rent is 34% of median income in Los Angeles County, California, and 29% of median income in both New York County, New York, and Cook County, Illinois (home of Chicago). Florida is the most rent-burdened state, with average rents above 35% of income in nearly all counties.

Figure 1: Rent burden by county

Source: US Census Bureau.

There is a chronic shortage of housing in many parts of the country. This low supply met surging demand after the pandemic . In the aftermath of lockdowns, many renters demanded larger units to accommodate remote work. There was also a rise in household formation, as more renters looked to live alone rather than with room-mates.

Many Americans also emerged from lockdown periods with increased savings from pandemic stimulus checks. Covid-19 also accelerated an exodus from large (and unaffordable) cities towards smaller towns and suburbs.

This increased demand without commensurate supply resulted in spiking rents. Figure 2 tracks CPI (consumer price index) inflation and rent inflation, with rent measured by Zillow’s ‘observed rent index’ (ZORI). Rent inflation ran more than a percentage point higher than CPI inflation during the five years leading up to the pandemic, before surging to roughly seven percentage points ahead (at nearly 16%) in 2022.

Figure 2: Rent and CPI inflation, 2016-25

Source: Rent data from Zillow, CPI data from FRED.

The crisis appears to have peaked in mid-2022. But this is little comfort to the millions of Americans whose rent is still eating up more of their monthly budget than ever before. Even so, it does mean that explosive rental growth has ended in many areas.

Policy-makers, mainly in the South and Southwest of the country, have recognised the crisis and taken steps to address it by unlocking abundant housing. Many states and cities have looked to boost homebuilding by easing land use restrictions, such as zoning codes, and allowing more types of housing to be built, such as duplexes, triplexes and ‘accessory dwelling units’ (that is, self-contained annexes).

But not all areas are so lucky. Recovery has been uneven and the crisis is still raging in many parts of the country.In much of the Midwest and the Northeast, annual rent inflation remains above 5%, placing relentless pressure on the cost of living.

Where are Americans moving?

To understand the current shape of the US rental crisis, it useful to consider which areas are gaining or losing residents – that is, where the local population is going up or down.

Figure 3 shows population changes by state from 2020 to 2023. Since the pandemic, hundreds of thousands of people have moved away from large states with major cities. New York, California and Illinois have experienced the biggest losses. Meanwhile, the states in the Sun Belt – the group of states stretching from Virginia and Florida through to Southern California – have seen the largest population gains.

The primary driver of this internal migration is the cost of living. Housing costs in major cities like Chicago, Los Angeles and New York have become prohibitive for many people, and they are now seeking less expensive areas as a result.

This trend has been helped along by the rise of remote work. Many employees are no longer tied to their place of work and they can live wherever they want. There is no need to live near Silicon Valley or Manhattan, so long as you have a stable internet connection.

But population loss is a fate that all areas should seek to avoid. As people move away, states and cities with lower populations lose economic activity and tax revenue.

They can even experience a decline in their political power. For example, in the 2030 re-apportionment cycle, California, New York and Illinois are projected to lose four, three and two congressional seats, respectively. Texas and Florida, in comparison, are projected to gain the most seats.

Figure 3: Population change, by state

Source: US Census Bureau.

Mapping rent inflation

No area of the United States has been completely safe from steep rent inflation over the past half decade. Figure 4 shows rent inflation over the past five years, measured by changes in ZORI. The Sun Belt saw the greatest relative increases in rent, as the rush of new arrivals created high housing demand. Florida was the most affected state, with renters in most counties paying over 50% higher rent in 2025 than before the pandemic.

Figure 4: Five-year changes in ZORI, by county

Source: Zillow (most recent data: February 2025)

Thankfully, policy-makers in some of the most affected areas have responded to the crisis over the past two years. Throughout the Southeast and the Southwest, officials have reacted to the price surge by enacting policies to boost homebuilding. Many state and local governments across the Sun Belt have loosened regulations on homebuilding, relaxing rules such as zoning codes, parking minimums and height restrictions. Crucially, this has allowed for more ‘built-to-rent’ housing.

But what has been the effect of this approach on prices? Figure 5, which maps the one-year change in ZORI, shows that rent inflation in the Sun Belt has now levelled off. A small handful of counties, mostly in Texas and Colorado, even saw their rent index decrease over the past year. But in the Midwest and the Northeast, where homebuilding remains sluggish, rent inflation remains high. It seems that the key to affordability is ample supply.

Figure 5: One-year changes in ZORI, by county

Source: Zillow (most recent data: February 2025).

Supply and demand

When housing is scarce, renters must compete for fewer available units. Zillow also calculates an ‘observed rent demand index’ (ZORDI), which is based on the web traffic for the typical listing in an area.

Figure 6 shows the year-on-year change in rent and the rent demand index in America’s 50 largest metropolitan areas. Note how this plot sorts itself into regions. In the Sun Belt, prices are levelling off as renters face lower competition. But in the Midwest and the Northeast, cities with competitive markets are seeing the steepest rent increases.

Figure 6: Rent inflation and rent demand index

Source: Zillow (Most recent data: February 2025).

The US rent affordability crisis is primarily a supply-driven dynamic (as opposed to one caused by variations in consumer demand for homes). Using homebuilding data from the US Census Bureau's Building Permits Survey, it is possible to plot a clear negative relationship between the number of approvals for new multi-unit (that is, built-to-rent) housing structures and rent inflation (see Figure 7).

Figure 7: Rent inflation and housebuilding

Source: Rent data from Zillow. Homebuilding data from the US Census Bureau (most recent data: February 2025).

The lone blue dot in the bottom right-hand corner of this chart represents Austin, Texas. Despite being one of the fastest-growing cities in the country, rents in Austin have declined for nearly two straight years.

City planners have aggressively boosted homebuilding to keep up with demand. Since the Covid-19 crisis, the city has overhauled its land use policy, most notably eliminating single-family zoning (a regulation that restricts development in a specific area only to detached single-family homes, prohibiting other housing types such as duplexes or multi-family apartment buildings).

No American city has built more new residences per capita since the pandemic than Austin and no city has seen rents decrease faster. Once again, the key to affordability appears to be ample supply.

Case study: Florida’s major cities

Florida has been at the sharp end of the rent affordability crisis over the past five years. The various figures above show that the Sunshine State is also one of the most rent-burdened. Florida has also seen the highest relative population gain and it has experienced the worst rent inflation since the pandemic.

A comparison of Florida’s major cities shows that an undersupply of housing is driving the crisis (in contrast to the Austin story). Figure 8 shows housebuilding and rental growth in Florida's four largest urban areas, which are home to more than half of the state’s population.

Figure 8: Homebuilding and rental growth in Florida, 2020-25

Source: Rent data from Zillow. Homebuilding data from the US Census Bureau (Most recent data: February 2025).

Orlando and Jacksonville have built more homes than the rest of the state and they have seen their rental growth slow as a result. Rents are still extremely high, but they have levelled off in comparison with other parts of Florida where costs continue to spiral. If building rates in Orlando and Jacksonville keep pace, incomes should eventually catch up with rents and the cities will become more affordable.

In contrast, cities like Miami and Tampa have a lot of catching up to do. Until more properties are built in these cities, rents are likely to remain stubbornly high.

What next?

There is a pressing need for more housing in America. The cities and regions that have built the most homes have seen the slowest rental growth. Those that have built the least have seen prices rise fastest. After an intense spike, there is reason for optimism, but only in the areas where policy-makers have acted decisively to prioritise supply.

In some parts of the Sun Belt, unlocking abundant new housing has paid off, with rental growth stabilising. But if the Midwest and the Northeast continue to fail to build more housing, they will become even more expensive and could lose more of their population. This is a fate all areas of the country should seek to avoid. Failure in one region could also ramp up pressures in another, as people move state/county in the hope of finding a less expensive place to live (driving up demand in doing so).

A growing number of state and local governments have recognised the role of housing supply and taken steps to address their housing crunch. Several states (most notably California) have ended single-family zoning, opening up more areas to built-to-rent housing.

Many cities have also changed land use policies to promote ‘missing middle’ housing – units such as duplexes and triplexes that allow for more housing with minimal changes to the character of neighbourhoods. Last year, New York City became the largest city to update its zoning code to boost homebuilding.

Housing shortages are not unique to the United States. Major cities across the European Union and the UK also face significant housing crunches. These cities are generally smaller and have less room for urban sprawl than the United States, so boosting housing supply is not as simple. Still, the lesson remains clear: addressing the affordability crisis requires more housing, which requires supply-side reforms.

Like the United States, many areas in the UK have restrictive land use policies that keep the housing stock low, and many local councils have little incentive to change tack. Fortunately, increasing the country’s housing stock has become a national priority. Last year, Keir Starmer’s government pledged to build 1.5 million new homes. The plan faces significant political and practical challenges, but if it proceeds, rent inflation could level off in the UK as it has in much of the United States.

Where can I find out more?

Building any new homes reduces housing costs for all: article by John Burn-Murdoch in the Financial Times in September 2023.
Rent is finally cooling: data story by Hanna Zakharenko, Abha Bhattarai and Janice Kai Chen in the Washington Post in July 2024.
What’s working: Why rents in Denver and other parts of Colorado are dropping: article by Tamara Chuang in the Colorado Sun in April 2025.
Austin rents have fallen for nearly two years. Here’s why: article by Joshua Fechter in the Texas Tribune in January 2025.
On The Housing Crisis: book on housing in the United States by Jerusalem Demsas.