As the rental market cools, landlords are introducing various incentives to quickly lease vacant properties, such as waiving monthly rent or reducing fees, providing some relief to renters.

Data from property platform Zillow in March shows that U.S. rent growth has fallen to its lowest level since 2020. The national average asking rent for apartments and houses is approximately $1,910, up just 1.8% year-over-year.

The Zillow report indicates that while rents are still rising modestly, the rate of increase has fallen behind the growth in household income, slightly easing affordability pressures. Over the year ending in March, the share of the median U.S. household income spent on rent declined from 29.4% to 26.5%.

The cooling rental market is directly reflected in the variety of concessions available. Zillow data shows that nearly 40% of rental listings now include some form of incentive, as landlords compete for tenants. Common benefits include one month of free rent, waived application or move-in fees, and added perks like free parking.

A senior real estate broker at Douglas Elliman, Senada Adzem, commented, "The current situation is the result of the supply wave finally catching up with rental demand. With significantly more choices, tenants are forcing landlords to proactively enhance their offers and competitiveness."

Why Rents Are Weakening A large volume of newly constructed apartments hitting the market has directly suppressed rent growth. Analysis by the National Association of Home Builders, based on Census Bureau data projections for 2025, reveals a surge in the construction of multi-family housing, primarily apartment buildings. In 2024, completions of new apartments reached 608,000 units, a high not seen since 1986.

This substantial influx of new inventory is gradually being absorbed by the market, expanding options for tenants and intensifying competition among landlords. Simultaneously, the rental vacancy rate has recovered from the extremely tight post-pandemic lows. The increase in vacant units is putting further downward pressure on rents.

Zillow senior economist Orphe Divounguy added that some of the additional supply is coming from individual homeowners. Many homeowners, holding ultra-low 30-year fixed mortgage rates around 3%, are opting to rent out their properties rather than sell and purchase a new home at current mortgage rates of approximately 6.2%. "This additional source of supply is a key driver behind the slowdown in rent growth," he noted.

Regional Variations: Not All Rental Markets Are Cooling Among the 50 largest U.S. metropolitan areas, 30 have seen a significant increase in rental concessions compared to last year, but the market performance is uneven.

Cities like San Francisco and New York continue to experience tight rental supply and demand. Data shows that rents in New York City have increased by 4.2% year-over-year. A local New York broker noted that Manhattan inventory is extremely scarce, with open houses often crowded and a single unit typically attracting at least 20 prospective tenants.

However, such hot and tight markets are the exception rather than the rule. In most parts of the U.S., an oversupply of rental units is prompting landlords to use concessions to attract tenants.

Eric Leland, a real estate broker in Oregon, explained, "The most common incentive right now is offering one month of free rent on a 12-month lease, along with waiving application and move-in fees." He advised tenants to proactively negotiate for benefits, such as requesting the free rent upfront or seeking flexibility on the move-in date.

The number of building permits, an indicator of future new supply, has declined from its 2022 peak, suggesting that the delivery of new apartment units may gradually decrease over the next 1 to 2 years.

Industry professionals advise that renters in cities with a high concentration of new units should take advantage of the current soft market and abundant concessions to secure favorable lease terms. This could help them avoid potential tightening of the rental market and reduced supply in the next 12-24 months.