Single-Family Rent Prices Soar as Millennials Fuel Demand in U.S. Housing Market

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Single-Family Rent Prices Soar as Millennials Fuel Demand in U.S. Housing Market

Jun 10, 2025

Millennials Driving Single-Family Rent Surge, Zillow Report Finds

Forget blaming Millennials for brunch choices — their impact on the U.S. rental market is far more significant. A new report from Zillow indicates that Millennials are now a major influence behind the surging rental prices of single-family homes.

As homeownership becomes increasingly difficult due to limited supply and affordability issues, more families are opting to rent houses instead of buying. Zillow’s latest research reveals that rents for single-family homes have climbed roughly 41% above their pre-pandemic levels. In contrast, multifamily rents have risen by 26% during the same timeframe. As of December 2024, the typical asking rent was $2,174 for single-family homes, compared to $1,812 for multifamily units.

“Rent growth has slowed, but levels remain elevated,” said Orphe Divounguy, Zillow’s senior economist. He notes that while wage increases have outpaced rent growth in multifamily housing, they still lag behind the rent growth rate for single-family properties.

Buying Becomes Less Accessible — and Renters Are Getting Older

Barriers such as low housing inventory, rising home prices, and the difficulty of saving for a down payment are pushing many away from homeownership. One Zillow affordability tool calculates how long it would take to save a 10% down payment on a typical home, assuming 5% of the median household income is saved monthly.

As of November 2024, this timeline stretched to nine years, up from seven years in late 2019 — prior to the Covid-19 pandemic.

Another major factor is mortgage rates. After falling to an all-time low of 2.65% in January 2021, rates surged in response to Fed policy tightening, peaking at 7.63% in October 2023. Even with three rate cuts in late 2024, 30-year fixed mortgage rates have hovered near 7%.

This pressure is affecting renter demographics. “The median age of renters has steadily increased,” said Divounguy, noting a sharp jump between 2023 and 2024, when the median age reached 42 years, up from 33 years just three years prior.

Rents Rise Nationally — But Supply Can’t Keep Up

The Zillow report found that rents for single-family homes increased year-over-year in all 50 of the largest U.S. metro areas it studied. Multifamily rents rose in 42 out of 50 metros.

“We’re seeing more multifamily construction now than at any time in the past 50 years,” said Skylar Olsen, Zillow’s chief economist. “But that surge doesn’t extend to detached homes.” Olsen also noted that Millennials are seeking more space, and with unpredictable mortgage rates and large down payments, renting becomes the more accessible path.

Metros with the highest single-family rent increases included:

Hartford (↑7.7%)
St. Louis (↑7.6%)
Cleveland (↑7.4%)
Chicago (↑6.8%)
Indianapolis (↑6.6%)

For multifamily units, the top increases were in:

Hartford (↑8.3%)
Cleveland (↑6.3%)
Providence (↑6.3%)
Richmond (↑5.8%)
Chicago (↑5.4%)

Landlords Offer Concessions — but Demand Remains Strong

With rental prices staying high, landlords are increasingly offering incentives — such as free rent or free parking — to attract tenants. Zillow reports that about 41% of listings now include concessions, the highest rate on record. Concessions have increased in 48 of 50 major metros, with Denver, Louisville, Raleigh, Indianapolis, and Nashville seeing the largest year-over-year jumps.

Builders Adapt to Market Challenges

Despite rising construction costs and many homeowners locked into sub-5% mortgage rates, builders haven’t retreated. “Builders could have pulled back,” said Divounguy, “but instead, they’ve adapted.”

This adaptation includes smaller or taller projects — such as condos and townhomes — to increase density and meet demand. “They’ve done well adjusting to changing market conditions,” he added.

Zoning reforms from local governments — such as removing minimum parking requirements and lot size restrictions — will also be critical to boosting supply.

Bottom Line

According to Census Bureau data, single-family homes make up only 31% of the rental market, yet they face outsized demand and pricing pressure. The Zillow report highlights ongoing struggles in the U.S. housing market — but also offers hope.

Builders are ramping up activity, and housing affordability is gaining more public attention. “This is the most we’ve heard about affordability in years,” said Divounguy. “Governments are finally talking seriously about real solutions.”