The typical U.S. rent climbed to $1,962 a month in July, up 2.3% from a year earlier, as mortgage rates near a one-year high keep would-be buyers stuck in the rental market instead of moving into homeownership, according to Zillow’s July Market Report. The increase marks a reacceleration after a stretch of milder rent growth, and it lands at a moment when the annual cost of renting has moved uncomfortably close to the annual cost of financing a typical home. That narrowing gap is reshaping who competes for rental listings and how much leverage renters have when a lease comes up for renewal.
The Rent-Versus-Mortgage Math Driving The Shift
Zillow’s research puts the income needed to comfortably afford the typical U.S. rental at about $78,500 a year, compared with roughly $99,800 a year to comfortably carry the mortgage on a typical home, a gap of more than $21,000 that has widened as borrowing costs stayed elevated. When the math favors renting that clearly, households who might otherwise buy a first home instead renew a lease or search for a new rental, adding to competition for the same pool of units.
That does not mean landlords have stopped competing for tenants. Zillow’s July data shows 39.8% of rental listings included a concession such as a free month or a reduced deposit, up from 36% a year earlier, suggesting that even as the national rent figure climbs, some property owners are still discounting to fill units in markets where new apartment supply has kept pace with demand.
The two dynamics are not contradictory so much as evidence of a market splitting in two directions at once. Rents nationally are rising because demand from priced-out buyers keeps growing, while concessions in certain metro areas are rising because new construction delivered over the past two years is still working its way into local supply. A renter’s actual experience often depends more on which of those two forces dominates in their specific metro than on the national average making headlines.
The size of the increase varies sharply by metro area. New York’s typical rent reached $3,627 in July, up 4.5% from a year earlier, and San Jose’s climbed to $3,782, up 7%, the same report found. Slower-growing markets look very different: Denver’s typical rent fell 0.9% over the same span and Dallas rents were essentially flat, up just 0.1%, illustrating how local supply and the local mix of buyers-turned-renters can pull two metro areas in opposite directions even while the national figure climbs.
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How Much Of The Increase Is New Versus Already Baked In
The July reading rose just 0.3% from June, but the year-over-year comparison tells the more important story: rent growth has been reaccelerating after months of milder increases, a pattern Zillow’s own reporting ties directly to renewed rental demand as home-buying affordability worsened over the summer. A single month’s modest gain can look unremarkable on its own, but stacked against twelve months of gains it points to a rental market tightening again rather than cooling.
Zillow expects that trend to continue rather than reverse through the rest of the year, projecting roughly 2.9% annual growth for single-family rentals against a milder 1.9% for apartments, according to the company’s rental market research. That split lines up with who is doing the renting: households priced out of buying a house often look first for a rental house rather than an apartment, concentrating extra demand, and extra rent pressure, on the single-family rental stock that competes most directly with the for-sale market.
Part of the reacceleration shows up because of how Zillow builds its rent figure in the first place. The Zillow Observed Rent Index is designed to track typical asking rents across the full housing stock, including units that are not currently listed, rather than simply averaging whatever happens to be advertised in a given month. That smoothing means the index can keep climbing steadily even in months when raw new-listing rents look choppy, since it is capturing rent growth built into the broader stock rather than one narrow slice of it.
Where Renters Have Leverage And Where They Don’t
Metro areas that added significant new apartment supply over the past two years tend to show softer rent growth and more concessions, while markets that built less new rental housing are seeing steeper increases with landlords under less pressure to discount. A renter’s leverage at lease renewal depends far more on local supply pipelines than on the national number reported each month.
Households comparing renting against buying are also weighing a decision that keeps getting pushed further out. As long as mortgage rates hold near their current level, the calculation that favors renting by more than $21,000 a year is unlikely to flip quickly, which keeps adding renewal-driven and first-time-renter demand into a market that was already tightening before rates moved this high.
Zillow updates its market report monthly, and the next release will show whether the reacceleration in rents held through August as mortgage rates stayed elevated, or whether renewed rental construction in some metro areas started pulling the national growth rate back down.
Where Renters Fit Into The Property-Tax Relief Picture
Rising rents are pushing more households to keep renting instead of buying, and property-tax relief is often framed as a homeowner-only benefit even though several states run circuit-breaker credits that renters can claim too. Those programs exist because a landlord’s tax bill gets built into the rent a tenant pays every month, whether or not the tenant realizes it.
The Senior Property Tax & Home-Cost Relief Kit is an 11-page kit that lays out the circuit-breaker credit that includes renters alongside the 5 kinds of property-tax relief and heating, cooling and home-repair help available to older households.
Compare the renter and homeowner programs in the Senior Property Tax & Home-Cost Relief Kit.
This article was researched and drafted with the assistance of AI and reviewed by The Money Overview editorial team.
