Rising mortgage costs are pushing would-be homebuyers into the rental market, increasing competition for available housing and putting further pressure on renters’ budgets.
Renters across the United States are facing a tougher housing market as rising borrowing costs make homeownership increasingly expensive and more people turn to rental properties.
The typical U.S. rent reached $1,932 per month in September, its highest level in three years, while national rental demand increased 19.2% year over year, according to an October report from Zillow. Rents were up 2.7% compared with September 2025.
Buying a Home Is Becoming More Expensive
Higher mortgage costs are discouraging prospective buyers, pushing some households to postpone homeownership and remain renters.
According to Zillow, the typical monthly payment for a new homebuyer climbed to $3,037, up 5% from a year earlier. That is substantially more than the typical monthly rent of $1,932, making renting a more affordable short-term option for many households.
“Elevated mortgage rates have pushed home shoppers straight into the arms of rentals,” Zillow Senior Economist Kara Ng said in the company’s report.
The shift is increasing competition for rental properties. At the same time, elevated borrowing costs can make it more expensive for developers to finance new apartment construction, potentially limiting the growth of available housing.
Economists warn that strong demand and constrained supply could make it difficult for rents to ease significantly in the coming months.
These Cities Are Seeing the Biggest Rental Demand Increases
Rental demand has risen sharply in several major U.S. metropolitan areas, particularly in California and the Sun Belt.
According to Zillow, the largest year-over-year increases were recorded in:
- San Jose, California: 82.5%
- San Francisco, California: 66.9%
- Austin, Texas: 49.3%
- Miami, Florida: 48.9%
- Phoenix, Arizona: 43%
However, rising demand has not translated into equally steep rent increases in every city. New construction has helped keep rent growth relatively moderate in Austin, Miami and Phoenix.
San Francisco recorded the country’s largest annual rent increase among the markets highlighted in the report, with typical rents rising 11.8%.
For example, an apartment renting for $4,000 per month in September 2025 would cost approximately $4,472 per month a year later if its rent increased at the same rate.
Economists Warn Rent Relief May Be Limited
The outlook remains challenging for renters as demand stays strong and housing affordability continues to pressure households.
Economist Jonathan Millar told The New York Times that landlords may retain greater pricing power while rental demand remains healthy and the supply of available housing is constrained.
The concern is that rent increases could continue to contribute to household financial pressure rather than provide relief from broader inflation.
Still, the national trend is not uniform. Zillow reported that year-over-year rental demand declined in several metropolitan areas, including:
- Louisville, Kentucky: down 6.2%
- Baltimore, Maryland: down 6.1%
- Washington, D.C.: down 5.6%
- Cleveland, Ohio: down 5.5%
- Hartford, Connecticut: down 2.9%
These declines may offer renters in those markets more room to negotiate, although falling demand does not necessarily mean rents are decreasing.
For many Americans, renting remains less expensive than buying a home for now. But with demand increasing and housing costs remaining elevated, finding an affordable rental could become more difficult in the months ahead.
