As the wheel of time and circumstance keeps rolling, its revolutions have brought to the fore a sector once battered by oversupply and falling rents: apartments.
In August, median apartment rents climbed 2.6% year-over-year to $1,790 -- the highest level seen since the summer of 2022 -- as demand rose and construction slowed. The increase marked the third consecutive month of year-over-year increases after two years that saw rents decline or flatten. Month-over-month rents were up by 0.3%.
“Rents are rising because demand is strong—in part due to high homebuying costs—and supply is cooling,” said Redfin senior economist Sheharyar Bokhari. “Builders are pumping the brakes due to high financing costs, elevated construction expenses and weaker investor appetite.”
The seasonally adjusted annual rate of apartment construction plummeted to 385,000 in July – down almost half (45.4%) from its level of 705,000 in August 2024, Redfin reported. Since the pandemic, the number of construction permits has fallen by 20%.
The new report has a very different tone from a May 2025 report issued by Realtor, which found that nationwide rents for apartments of all sizes were continuing to decline for the 22nd consecutive month, Similarly, in June 2025, Zillow found that rent growth was “historically subdued,” driving landlords to make the highest share of concessions of any June on record – a trend Redfin’s new report suggested may come to an end as renters with fewer apartment choices give landlords more opportunity to raise prices.
The improved outlook for apartments was, however, predicted in CBRE’s multifamily report for 1Q 2025. It pointed to signs of a rebalancing of supply and demand in the multifamily sector that was leading to improved net absorption, lower vacancy and rising rents in the quarter. It also noted that the sector accounted for the largest share of total CRE investment volume in the quarter, rising 33% year-over-year.
Asking rents in August 2025 escalated to $1,790 – just $70 below the $1,860 peak recorded in April 2022, Redfin reported. However, the effects were uneven.
Chicago enjoyed the biggest annual increase in median rents, rising 10.7% to $2,275. Other metros that saw boosts were San Jose (up 10.6%), Philadelphia (up 9.9%), Pittsburgh (up 9.8%) and Washington, DC (up 8.7%), while rents in Boston rose 8%.
Three metros bucked the rising trend: Austin (down 3.1%), Louisville (down 2.4%) and Jacksonville (down 1.9%).
By apartment size, 0–1-bedroom apartment rents rose 4.4%, two-bedrooms rose 3.6%, but rents for three-bedroom apartments remained flat.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.