Single-Family Rent Growth Hit 15-Year Low by October
Min 1: Multifamily Vacancy Already Hit Record 7.2%
Single-family rent weakness follows multifamily sector where national vacancy hit record 7.2% per Apartment List, highest since index launched in 2017. National median rent for apartments dropped 1% monthly to $1,367 while CoStar reported biggest monthly declines in 15 years. Cotality confirmed effective asking rents fell 0.7% year-over-year marking steepest annual decline in 4-plus years. Construction delivered 700,000 apartment units in 2024 but starts dropped 71% from first quarter 2022 peak with only 60,000 units breaking ground in third quarter 2025. The apartment oversupply spills into single-family rental market as renters have more options across both property types, forcing single-family landlords to compete on price or accept higher vacancy.
Min 2: Investor Purchases Added Supply While Demand Slowed
The timing couldn't be worse for single-family rental investors. They spent $483 billion purchasing just under one-third of all homes in 2025 through October, adding rental supply just as demographic headwinds emerged. Demographics show 32.5% of 18-34 year olds living with family—highest in years according to CoStar—reducing household formation that drives rental demand. First-time homebuyer median age up in expensive regions like California but it dropped in less costly Midwestern and Southern cities—the median age for first-time buyers reaches 36 in both Los Angeles and San Francisco, 35 in New York, but just 28 in Des Moines and 27 in Columbus, Indiana. Young adults staying home longer or moving to cheaper markets both reduce demand for single-family rentals in traditional investor target markets.
Min 3: Eighteen Metros Posted Year-Over-Year Rent Declines
The number of metros experiencing rent declines more than doubled from eight in January to eighteen by October among the largest 50 metros. Geographic spread of rent weakness suggests systemic oversupply rather than isolated market corrections. Markets that saw strongest investor buying during 2021-2023 boom now face steepest rent declines as all those acquired homes hit rental market simultaneously. Investors who bought Atlanta single-families in 2022 at 4.5% cap rates based on 8% annual rent growth projections now face flat or declining rents while property taxes and insurance costs climbed 15% to 20%, turning positive cash flow to negative. The underwater cash flow position forces some investors selling at losses while others hold hoping for recovery that may take years as supply digestion continues.
Min 4: Rent-to-Income Ratio Declined to 29.1%
One bright spot for renters: rent consumed 29.1% of average household income in 2025, down slightly from 2022 peak of 30.3% according to Reventure analysis. The improvement came not from falling rents but from wage growth at 4% outpacing rent increases. Median household income climbed to $83,200 in 2025, marking steady rise from $77,700 in 2023 and nearly doubling since 2005. For renters, the slight affordability improvement provides minimal relief as rent still takes far larger income share than pre-pandemic norms. The just-under-30% threshold historically marked boundary between affordable and cost-burdened renters—current levels leave majority of renters financially stretched with limited ability to save for down payments to transition to homeownership.
Min 5: Institutional Investors Shift to Build-to-Rent
Large institutional investors responded to single-family rental challenges by pivoting to build-to-rent communities. Major firms like Invitation Homes, Progress Residential, American Homes 4 Rent, and FirstKey Homes were net sellers for sixth consecutive quarter in 2025, offloading scattered single-family homes while diverting capital to purpose-built rental communities according to Parcl Labs. Build-to-rent offers institutional investors better economies of scale through centralized property management, reduced maintenance costs, and more efficient capital deployment compared to scattered single-family portfolios. The shift adds rental supply while reducing institutional competition for existing homes, benefiting small investors who lack capital for ground-up development. An investor who buys distressed single-family rental portfolios from institutions exiting scattered sites at 20% discounts to 2022 peaks generates 15% to 18% IRRs if rental markets stabilize by 2027.
The Takeaway
Single-family rent growth hit 15-year low by October with metros experiencing year-over-year declines doubling from eight to eighteen of largest 50 metros as investor purchases added supply while demographic headwinds showed 32.5% of 18-34 year olds living with family. The weakness follows multifamily sector where national vacancy hit record 7.2% with median apartment rent dropping 1% monthly marking steepest annual decline in 4-plus years as construction delivered 700,000 units in 2024. Investor timing proved unfortunate as they spent $483 billion purchasing nearly one-third of all homes in 2025 adding rental supply just as household formation slowed, with markets seeing strongest 2021-2023 buying now facing steepest rent declines turning positive cash flow negative. Rent-to-income ratio declined slightly to 29.1% from 2022 peak of 30.3% as median household income climbed to $83,200 with 4% wage growth outpacing rent increases, though improvement provides minimal relief. Institutional investors responded by shifting to build-to-rent communities, becoming net sellers for sixth consecutive quarter offloading scattered single-families while small investors buying distressed portfolios from institutions exiting at 20% discounts to 2022 peaks generate 15% to 18% IRRs if markets stabilize by 2027.
