This February, New York City had another month where rents were up on all fronts, both monthly and annually, for one and two-bedroom units. San Francisco retained its ranking above Jersey City as the 2nd most expensive city, after moving up a spot last month. Los Angeles dropped a position to become 8th with the largest monthly rent price decline of the top 10 markets, down 4.8%. Washington D.C. moved into the top 10 while New Haven fell out.
The Zumper National Rent Index reported a 2.9% annual increase in median one-bedroom rent, reaching $1,525, while two-bedroom rents rose 3.7% to $1,905. These gains mark an acceleration from last month’s 2.5% and 3.2% annual growth rates for one and two-bedroom units, respectively. Meanwhile, the latest Consumer Price Index (CPI) data revealed that shelter inflation appears to be slowing as of January 2025, however it is not reflective of the most up to date rent trends.
“Although shelter inflation has eased in recent months, its lagging nature—due to the way it’s calculated—means the full impact has yet to be realized,” explains Zumper CEO Anthemos Georgiades. “The Cost of Shelter CPI incorporates existing paid rents, whereas Zumper’s national rent index serves as a leading indicator, reflecting market rents today. As a result, the annual rent increases seen in our most recent data are likely to be reflected in CPI metrics over the coming months.”
The uptick in annual rent growth in this February’s national rent index suggests that the Federal Reserve may face greater inflationary challenges in implementing further rate cuts in the near future.
Many of the cities experiencing the largest annual rent price declines are concentrated in the Sun Belt, with Durham leading the nation as one-bedroom rent fell 7.6%. The other cities on this chart saw more modest declines of under 5%. While these markets continue to post negative annual rent growth, the declines have generally softened compared to last year, when some cities experienced double-digit drops. Austin, for example, saw one-bedroom rent down over 10% annually in February 2024. Though all of these Sun Belt markets saw record levels of new supply come online in 2024, many of these cities have either reached or are nearing their peak, and strong demand continues to absorb the influx of new rentals. As a result, the Sun Belt’s rental market has started to stabilize so rent growth is expected to be modest this year, with occupancy levels gradually returning to historical norms. With fewer new developments on the horizon, the window of falling rents in many Sun Belt markets may be starting to close as we progress further into 2025.
Lincoln and Omaha posted the second and third largest annual rent price growth rates in the nation, with one-bedroom rents surging 25.3% and 20.4%, respectively. Omaha emerged as one of the country’s most competitive rental markets last year, driven by strong job growth and workforce development that attracted more Nebraskans to the region. However, new housing supply has struggled to keep pace with demand, with only about 2,000 units built since 2020. The city’s consistently high occupancy rate—averaging above 95% for the past six years—has further reinforced property owners’ pricing power.
Similarly, Lincoln’s rapid rent surge is fueled by robust job growth—among the highest in the nation—combined with a relatively low cost of living. Despite leading the country in annual rent increases, Lincoln remains significantly more affordable than most of the other markets on our report, with one-bedroom rent currently at $990. With demand continuing to outstrip supply in both cities, upward pressure on rent prices is likely to persist until more housing becomes available.
