What the data shows
Zillow's October report found the typical U.S. rent hit $1,932 in September, the highest in three years, and national rental demand grew nearly 20 percent year over year. Zillow tied the shift to higher mortgage rates cutting into homebuying and turning some would-be buyers into renters.
The company also said the average monthly payment for a homebuyer rose to $3,037, which makes renting relatively cheaper until borrowing costs come down. Zillow Senior Economist Kara Ng put it plainly: "Elevated mortgage rates have pushed home shoppers straight into the arms of rentals."
Where demand is surging and slipping
Several metro areas saw big jumps in rental demand. Zillow reported an 82.5 percent year-over-year increase in San Jose, 66.9 percent in San Francisco, 49.3 percent in Austin, 48.9 percent in Miami, and 43 percent in Phoenix.
San Francisco also posted the largest year-over-year rent increase at 11.8 percent. To make that concrete, an apartment charging $4,000 per month in September 2025 would average $4,472 in September 2026 under that rise.
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Not every market followed the pattern. Zillow flagged declines in rental demand led by Louisville at -6.2 percent, Baltimore at -6.1 percent, Washington, D.C. at -5.6 percent, Cleveland at -5.5 percent, and Hartford at -2.9 percent.
Why it matters for your portfolio
Economist Jonathan Millar told The New York Times that a break for renters is unlikely soon, saying, "We're not in deceleration world anymore, probably not going to get a lot of disinflationary pressures from rents." He added, "If anything, the risks are that we may be going the other direction," and noted landlords benefit from strong demand and tight supply while high mortgage rates make it harder for builders to borrow to construct new apartment buildings.
That mix means renters can expect pressure on monthly payments where demand is rising, and landlords may hold pricing power until supply improves or borrowing costs fall.
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