Rent growth, as measured by the Consumer Price Index, will remain somewhat elevated for now but will soften toward the end of 2025, according to a Zillow forecast.
The real estate data firm predicts that the seasonally adjusted Owner’s Equivalent Rent (OER) will increase by 0.3% in June, representing a modest uptick from a gain of 0.27% recorded in May. For 2025, Zillow expects a 3.5% annual OER increase, with an additional 2.3% increase anticipated next year.
Seasonally adjusted Rent of Primary Residence is expected to increase 0.28% in June, up from 0.21% in May, according to Zillow’s forecast. The company expects a 3.2% annual increase in Rent of Primary Residence by the end of 2025, followed by a 2% increase next year.
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The trends point to a deceleration in rent growth, but Zillow said the slight monthly uptick in CPI rent and OER may reflect statistical noise or mean reversion following a weaker-than-expected performance last month.
“Given the lagged nature of these measures and the gradual pass-through from market rents, occasional month-to-month volatility is not unusual, even in a broader disinflationary environment,” said Zillow.
Zillow revised its 2025 on-market rent growth outlook slightly downward, with rents for single-family homes expected to increase by 2.7% while multifamily rents are expected to rise 1.3%, said the report. The shelter components of the CPI continue to increase at a faster pace than on-market rent trends, reflecting not only new lease pricing but also rent changes for renewing longer-term tenants, said Zillow.
New shelter inflation numbers from the Bureau of Labor Statistics are expected to be released on July 15.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
