Average Rent Increase Per Year: Everything You Need to Know

Setting the right rent price is one of the most important decisions a landlord can make. Not only does it help you stay competitive in your local market, but it also ensures you keep pace with rising expenses like maintenance, property taxes, and insurance. 

One of the best metrics that helps you price your rental property right is understanding average rents and the average rent increase per year, as this can help guide your decision, ensuring you keep your rental in line with market rates.

Determining the average rent increase per year requires careful analysis of market trends, an understanding of your legal requirements, and a clear picture of your long-term financial goals, you can leverage market data to set a fair and reasonable rent increase.

In this guide, we’ll break down everything landlords need to know about setting rent, the factors that drive yearly increases, and how to use average rent increases in the process. 

Average Rent Increases In The US: Understanding The Data

Nationally, average asking rents have climbed steadily over the past decade, rising roughly 66% between 2015 and 2025, and continue to grow at above-pre-pandemic rates. Yet these headline figures mask huge variation from metro to metro and state to state. 

To set and justify your rents responsibly, start with the big picture (national averages and year-over-year trends) but drill down to neighborhood, metro, and even property-type indices (e.g., single-family vs. multifamily) to get to pricing that truly reflects the market.

Understanding Average Rent Trends On A National Level

Over the last ten years, U.S. average rents rose from about $1,000/month in 2015 to nearly $1,650/month in early 2025, a 65.9% cumulative increase and an approximate 5.2% compound annual growth rate (CAGR).

Year-over-year, growth accelerated sharply after the pandemic, peaking at nearly 8% in 2023, before moderating to about 5.1% in 2024 and 3.5% in March 2025.

Even as inflationary pressures ease elsewhere, rents remain 34.7% higher than just before COVID began in early 2020, underscoring continued upward pressure from limited supply and elevated demand.

Year-by-Year National Average Rent and Annual Change (2015–2025)

Source: Average Rent by Year, iPropertyManagement.com

Why Local Average Rent Trends Matter

1. State and Metro Divergence

Top-performing markets like Arizona and Tennessee saw cumulative rent jumps of 60–84 % over the last five years, dwarfing national averages.

In contrast, states such as Minnesota and South Dakota experienced flat or even negative growth over the same period.

2. Property-Type Splits

Single-family rental (SFR) units have outpaced multifamily (MFR) rents since 2021, widening the price gap from just $56 in January 2015 to $361 by December 2024.

3. Local Vacancy and Demand Dynamics

Neighborhood-level vacancy rates and rent-to-income ratios can shift pricing power. The American Community Survey shows certain tracts where median rents now exceed $3,500, double the cap in earlier years, while adjacent areas remain under $1,000.

Applying Data When Setting or Raising Rents

Step 1) Benchmark Against National and Regional Averages

• Start with the Zillow Observed Rent Index (ZORI) or BLS New Tenant Rent Index at the national level to see broad trends (e.g., a 4.0 % year-over-year increase in rent CPI as of March 2025).
• Compare this data to your state’s Fair Market Rents from HUD or your local ZORI to understand whether your market is heating up faster or cooling relative to the nation.

Step 2) Layer in Submarket and Property-Type Data

• Drill into ZIP or census-tract data via platforms like RentCafe, Yardi Matrix, or local MLS reporting.
• Cross-reference single-family vs. multifamily indices to price each asset according to its strongest peer group.

Step 3) Factor in Vacancy Rates and Affordability

• Use the U.S. Census American Housing Survey to check local vacancy trends—areas with sub-5% vacancy can justify premium rents, whereas 8–10% zones may require more modest hikes.
• Keep an eye on rent-to-income ratios; in high-burden locales (where renters spend >30% of income on rent), steep increases risk financial strain and turnover.

Step 4) Review Market Forecasts

• Construction Coverage projects 4.8 % national rent growth in 2025—higher in some markets (e.g., Midland +17.7% and Odessa +13.2%) and even declines in others (e.g., Rhode Island −4.8 %).
• Align your rent-raise strategy with these forecasts to stay competitive without overshooting tenant willingness to pay.

Related: 15 Most Landlord-Friendly States 2025 

When Can a Landlord Raise Rent? 

Generally, landlords are permitted to increase rent under the following circumstances:

• At the end of a fixed-term lease. Most states allow landlords to raise the rent once the lease term concludes. The new rate takes effect upon renewal, provided proper notice is given.
• When transitioning to a month-to-month agreement. If a tenant moves from a fixed-term lease to a month-to-month tenancy, landlords can adjust the rent, again with appropriate notice.
• When listing a unit for a new tenant. Landlords can set a new rent price for incoming tenants, reflecting current market conditions and the average rent increase per year.

Related: When Should a Landlord Increase the Rent?

However, several important limitations and requirements apply:

• Legal restrictions and rent control. While most states do not have strict rent control, some cities and states do limit how frequently and by how much rent can be increased. For example, California limits rent increases to twice per year, while Colorado allows only one increase per year. Some jurisdictions also have specific rules for certain property types, like mobile homes or subsidized housing.
• Notice requirements. Nearly every state mandates that landlords provide written notice before implementing a rent increase. For month-to-month leases, this notice period is typically 30 or 60 days, though it can vary by state and the size of the increase. For fixed-term leases, rent generally cannot be raised until the lease expires unless the lease specifically allows for mid-term increases or the tenant agrees to the change.
• Exceptions for special circumstances. Some states permit rent increases during the lease term for valid reasons, such as increased operating costs or property improvements, but only if the lease agreement includes these provisions.

Review your local state laws to determine rent increase notice requirements.

When Can’t a Landlord Raise Rent?

While raising rent is a standard practice among landlords, it’s important to be aware of certain legal restrictions that come with rent increases. While rent control ordinances vary from state to state, here are some of the common scenarios when rent increases are not permitted:

• The property is subject to rent control or rent stabilization laws, which cap increases and may limit how often rent can be raised. In these cases, any proposed increase above the legal threshold is prohibited.
• The tenant is in the middle of a fixed-term lease (such as a 12-month agreement), and the lease does not specifically allow for mid-term rent adjustments. Most states require landlords to wait until the lease expires before implementing a new rent amount.
• You have not provided the legally required notice before raising the rent. Most states mandate advance written notice—often 30 days—before any rent increase takes effect, even for month-to-month leases.
• The lease agreement explicitly states that the rent will not increase if the tenant renews for another term. In this case, the agreed-upon terms override general market practices or the average rent increase per year.
• The property is covered by local or state rent control regulations, which may restrict both the amount and frequency of rent increases.
• The rent increase is retaliatory, such as in response to a tenant exercising their legal rights (e.g., reporting code violations). Retaliatory increases are prohibited under most state laws.
• The proposed increase is discriminatory and violates the Fair Housing Act, such as targeting tenants based on race, religion, or other protected characteristics.

How Much Can Rent Be Raised Each Year?

The amount a landlord can raise rent each year depends on several factors, primarily local landlord-tenant laws and rent control regulations, market conditions, and the terms of the lease agreement. 

Typical Rent Increase Ranges

Nationally, the average rent increase per year generally falls between 2% and 5%, with most landlords aiming for a figure that covers rising expenses such as property taxes, insurance, and maintenance while remaining competitive in the local market. 

For example, if your monthly rent is $1,500, a standard 3% increase would raise the rent by $45 per month. However, in high-demand areas or during periods of rapid inflation, increases may exceed this range, while in slower markets, landlords may opt for more modest adjustments.

Recent Trends and Regional Variations

Recent years have seen significant fluctuations in rent increases. In 2024, the national average rent increase slowed to under 1% year-over-year, though some cities experienced much higher rates, up to 8% in certain markets. 

By contrast, during the post-pandemic surge in 2021 and 2022, average rent increases reached 12%–18% in some areas. This highlights the importance of staying informed about both national trends and local market conditions.

What Is a Reasonable Rent Increase?

A reasonable rent increase is typically one that aligns with the average rent increase per year in your region and reflects changes in your property’s expenses and market value. 

Most experts agree that a 2% to 5% annual increase is considered reasonable in stable markets, but landlords should always compare their rates with similar properties nearby to ensure their pricing remains fair and competitive. 

Drastic increases are rare and often only justified by significant property upgrades or extraordinary market shifts.

Related: How to Write a Friendly Landlord Rent Increase Letter

How to Set The New Rent Price for Your Rental

Here’s a step-by-step guide to determining your new rent price, factoring in the average rent increase per year and what is a reasonable rent increase for your area.

1. Evaluate Your Operating Expenses

Begin by calculating your total cost of ownership, which includes your mortgage, property taxes, insurance, HOA fees, utilities, maintenance, depreciation, and any property management or landlord software fees. This comprehensive review ensures your rental income will cover all expenses and generate a profit. 

With ownership costs rising in recent years, regularly auditing your financials is essential to avoid eroding your margins. Many landlords have reported annual cost increases of up to 10%, making it all the more important to reassess your rent price annually.

Related: What are Landlord Operating Expenses?

2. Analyze the Local Rental Market

The rental market is dynamic, shaped by supply and demand, economic trends, and seasonal fluctuations. Research current market conditions in your neighborhood by reviewing recent rental listings, vacancy rates, and local rent trends. 

Tools like Zillow and Rentometer can provide valuable benchmarks for your property type and location. Pay attention to peak rental seasons (typically May through August) when demand and rent prices tend to rise. 

Understanding these trends will help you determine if your proposed rent aligns with what tenants are willing to pay and what is a reasonable rent increase in your area.

3. Compare Similar Properties (Rental Comps)

Investigate what comparable properties—those with similar size, amenities, location, and condition—are charging for rent. This comparison provides a market-driven baseline for your rent price. If your property offers unique features or recent upgrades, you may be able to justify a higher rent. 

Conversely, if your unit lacks certain amenities, pricing slightly below the average may help attract tenants and minimize vacancy. Regularly updating your comps analysis ensures your rent remains competitive as the market evolves.

Related: 2025 Rental Property Analysis Spreadsheet [Free Template]

4. Factor in Tenant Retention and Reasonable Increases

While maximizing income is important, consider the impact of rent hikes on tenant turnover. Excessive increases can drive tenants to seek more affordable options, leading to costly vacancies. The average rent increase per year in the U.S. typically falls between 3% and 5%, though this varies by region and market conditions. 

Staying within this range is generally viewed as a reasonable rent increase, helping you retain quality tenants while keeping pace with rising expenses.

5. Monitor Market Response and Adjust as Needed

Once you’ve set your new rent price, monitor interest from prospective tenants. If you’re not receiving inquiries or applications, the price may be too high and could require adjustment. Conversely, strong demand may indicate room to increase rent further. Regularly reviewing your pricing strategy ensures you remain responsive to market shifts and tenant expectations.

How to Communicate Rent Increases to Tenants

Providing Notice of Rent Increase

When planning to increase rent, always issue a formal Rent Increase Notice to your tenants. This written notice is essential for transparency and helps avoid misunderstandings about the new rent amount. 

Many states require landlords to provide this notice within a specific timeframe—typically 30 or 60 days before the lease ends or the increase takes effect—to comply with local landlord-tenant laws. Failing to follow these legal requirements can lead to disputes or legal complications.

Direct Communication with Tenants

Along with the official notice, consider reaching out to tenants directly, either by phone, email, or in person, to explain the reasons behind the rent increase. 

Express appreciation for their tenancy and clearly outline the factors prompting the adjustment, such as rising property taxes, maintenance costs, or changes in the local rental market. Providing market data or a breakdown of increased expenses can help tenants understand the rationale and foster trust.

Handling Tenant Negotiations

It’s common for tenants to want to negotiate the new rent, especially if they are interested in renewing their lease. Allowing room for negotiation can strengthen your landlord-tenant relationship and may lead to a mutually satisfactory agreement. 

For example, if a tenant expresses concern over the increase, you might offer a compromise, such as a smaller increase in exchange for a longer lease commitment. 

Take Control of Your Rental Portfolio With Landlord Studio

Ready to make smarter decisions about your rent prices and streamline every aspect of property management? 

Landlord Studio gives you the tools you need to confidently manage your rentals, collect rent online, schedule rent changes, and communicate changes efficiently with tenants.

With Landlord Studio, you can:

• Automate rent collection and never worry about late payments again.
• Instantly generate detailed financial reports to assess your property’s performance and support your rent increase decisions.
• Digitize receipts, reconcile transactions, and manage your accounting—no more messy spreadsheets or paperwork.
• Simplify tenant communication with automated rent reminders, email and SMS templates.
• Access your portfolio anytime, anywhere, from desktop or mobile.

Create your free account today and experience how easy rental management can be—from setting the right rent to collecting payments on time, every time.