Average Rent in the U.S. — Trending Upward or Downward?

Renting is what you do to have a roof over your head when you’re not financially ready to buy a house — at least, that’s what it should be. Unfortunately, the state of homelessness in the United States has dramatically worsened over time, suggesting that landlords have been charging too high.

Is the average rent in the U.S. skyrocketing? What forces are driving it up? Which Americans pay the highest average rent per month? Where is the cheapest state to live in? Get these burning questions answered to get a clear picture of how rental markets nationwide differ.

What Factors Determine Rent?

Rent doesn’t move in a vacuum. These factors influence whether it goes up or down.

Location

Geography dictates real estate trends, for most people consider only the rentals within the municipalities where they prefer to live.

Cities have what most individuals seek — employment opportunities, high income and modern conveniences — making them more crowded than the countryside. Rural populations are shrinking because fewer people prefer slow-paced lifestyles involving backbreaking agricultural work for profit or self-consumption.

The result is that developed areas are generally more valuable and have higher rental rates. Conversely, rent is cheaper in less developed areas that struggle to consistently record positive net migration.

Imbalance Between Housing Supply and Demand

Surging demand shouldn’t drive up rental rates if the housing supply is enough to satisfy it. More people compete for fewer homes when demand surpasses supply, compelling aspiring tenants to engage in bidding wars — zero-sum games. The number of people living on the streets is rising because the U.S. has an undersupply of 1.5 million vacant homes for rent and for sale.

Property Qualities

Homes are not equal. Like persons, housing units derive their identity from their appearance, history and surroundings. Some are bigger than others, while some are more modern. Even homogenous properties aren’t 100% identical. A single-family home listing on a peaceful block will almost always be an easier sell than its replica with a criminal past on a street of abandoned houses frequented by squatters.

Economic Conditions

Landlords can only over-charge as long as tenants are willing to pay. When times are bad, blue-chip prospects are few and far between. When times are good, more aspiring tenants populate rental markets because even would-be homebuyers resort to renting when they can’t outbid their more loaded or desperate fellows.

Government Policies

The authorities can manipulate the factors influencing rental rates, driving up housing costs. Deciding which areas to develop to achieve economic targets and passing zoning ordinances and laws that permit or ban specific residential property types determine local population densities.

Moreover, rent regulation outlines price control measures, such as establishing rent ceilings and disallowing significant hikes between tenancies. Federal funds rate increases make it more expensive to borrow cash to build or purchase a house by design to curb inflation, leading to higher demand for renting a home and a lower one for buying.

What Is the Average Rent in the U.S.?

According to doxo’s 2023 State by State Bill Pay Market Report, the average rent per month nationwide was $1,191. Rent was the most expensive bill for Americans who didn’t have a mortgage, which was 33% of all households in the country.

The bigger the apartment, the more expensive the rent is. As of November 2023, the difference between the average rent in the U.S. for 1-bedroom and 2-bedroom units was $168 per month, which was more pronounced in densely populated cities where housing was scarce. 

In most American metropolitan areas, landlords charge rent at a premium. As of May 2024, the average rental costs in 48 metros were higher than where they should be. New Haven, Connecticut, led the union regarding rent premium with 7.69% — 5.08 percentage points higher than the national average. Tenants in the Elm City had to make $84,666 annually to avoid spending 30% of their income on rent alone and being labeled “house poor.”

On the other end of the spectrum, landlords in 15 metropolitan areas gave tenants a discount. For instance, renters in Austin, Texas, paid 3.06% less or $57 monthly than the reasonable rental rate in ATX.

Which U.S. City Has the Highest Rent?

The most expensive city for renters in the most expensive American state for renters — Hawaii, whose average monthly rent is $1,856 — is technically not a city. It’s a census-designated place called Kailua. Tenants in zip code 96734 pay $3,940 to cover all their monthly bills, which generally include housing.

The town’s rental rate isn’t an anomaly. Instead, it’s a reality shared by the rest of the Aloha State’s top 20 most expensive places to live in. Recording a cost of living index of 193.3 points in 2023, which was twice the national average, Hawaii was the most financially burdensome state to call home.

The Pacific island state faces many obstacles. Hawaii’s small land area and fragmented mountainous terrain make solving its housing shortage challenging as it is. Its self-inflicted regulatory hurdles make life difficult for homebuilders.

Being a paradise can be a disadvantage when you have an acute housing problem to fix. As of 2020, about 226 people lived per square mile in Hawaii. If the status quo remains unchanged, the state will become more crowded due to reproduction, immigration and tourism.

Which State Do People Rent in the Most?

New York ranks first in this category. Forty-four percent of households in the Empire State rent — one percentage point higher than California.

Many tenants make their landlords $1,507 richer monthly because the East Coast state justifies it with handsome potential earnings. The average salaried employee in New York makes $51,646 annually and enjoys a high disposable income.

What State Has the Lowest Rent?

West Virginian renters spend the least amount of money on housing in the U.S. They only represent 22% of the Mountain State’s population — also the lowest in the nation. Although it’s cheap to live in the 35th state, it doesn’t mean its residents have won the lottery.

Part of the reason landlords relatively charge peanuts is that there’s not enough money to go around. West Virginia tallied a 16.8% poverty rate in 2021, making it one of the poorest in the union.

Which Direction Will the Average Rent in the U.S. Go Beyond 2024?

Rental prices can behave cyclically. They may continue moving within a certain range until a significant event causes them to shoot up or plunge. Pay close attention to the factors influencing them to determine the most sensible place to live without owning a house.

Need more help finding a place to rent without breaking your bank? Check out our resources on the cheapest way to live alone while renting in our current market.