After a strong first half of the year, single-family rent growth is showing clear signs of weakness, suggesting that landlords may soon need to adjust as consumers face mounting financial pressure. New data indicates that July’s rent gains for single-family homes were slower than expected, marking a cooling phase in a market that had been resilient through most of 2024.

Single-family rents in July rose just 2.3% from the same month a year ago, down from a 3.1% annual increase recorded last year, according to the latest figures from Cotality. This slowdown pushes rent growth below the lower end of its 10-year pre-pandemic average — a notable signal that demand may be softening after years of steady appreciation.

“After a strong start to the year, single-family rent growth is clearly losing steam,” said Molly Boesel, senior principal economist at Cotality. “In July, we broadly saw weakening in annual single-family rent growth across metro areas and price tiers.”

Month-to-month data reinforced the cooling trend. Rents were up only 0.2% from June to July, far below the historical average increase of 0.7% for that period. That’s a sharp contrast from earlier in the year when monthly gains outpaced seasonal norms.

Even previously resilient markets are now seeing slower momentum. “Even markets like Los Angeles, which had been buoyed by post-wildfire demand, are now cooling off. Chicago stands out as the exception, leading the nation in rent growth amid tight inventory and resilient demand,” said Boesel.

Among the nation’s ten largest metro areas, Chicago topped the list with 5.1% rent growth, followed by New York City at 3.7%. Philadelphia and Washington, D.C., also remained strong, while Los Angeles rounded out the top five despite its slowdown. Meanwhile, Dallas and Miami lagged behind, with Miami seeing no rent growth at all — a dramatic change from 2022, when pandemic migration drove Miami rents up nearly 40%.

Rent softening was evident across all price segments. High-end single-family homes saw rents rise just 2.9% annually, compared with 3.2% the year before. Lower-end rents increased only 1.6% in July, down from 2.8% in July 2024, showing that the slowdown spans the entire market.

For several years, single-family rentals outperformed apartments, buoyed by limited supply and homebuyers priced out of ownership. Families seeking space and access to quality school districts turned to single-family rentals instead. But as more rental communities are built and home prices stabilize, that demand advantage may start to fade.

Single-family rental REITs like Invitation Homes and American Homes 4 Rent have been expanding aggressively to meet demand, developing entire rental communities. However, this latest cooling trend could prompt them to reconsider growth plans or shift strategies.

As Property Play reported in July, the largest single-family rental REITs have been selling more homes than they’ve been buying, focusing on consolidating portfolios and investing in purpose-built rental communities. Whether this slowdown alters that strategy remains to be seen, but it’s clear that the single-family rental market is entering a new, more cautious phase.