A surge in apartment construction is beginning to lower rents in certain areas, particularly in the Sun Belt states. Despite these price drops, most tenants are still paying significantly more than earlier in the decade, while rents in the Northeast and Midwest continue to rise.

The growing availability of apartments has ignited debates about the effectiveness of new construction in addressing housing affordability. While new developments can prevent gentrification and provide much-needed housing, they are expensive to build and often fail to deliver affordable options for low-income renters.

“When you don’t allow enough homes to get built in high-income neighborhoods, higher-income people tend to move into lower-income areas,” said Alex Horowitz, director of the Housing Policy Initiative at Pew Charitable Trusts. “Then lower-income people have nowhere to go.”

Rent Trends Across the U.S.

According to an Apartment List analysis, national rents peaked at a median $1,394 in 2022 and have since dropped slightly, down 2% to $1,373 by December 2024. States like Arizona, Georgia, Utah, and South Dakota, where apartment construction boomed, saw rent decreases of 4-6%. Meanwhile, rents in 32 states, including North Dakota, Connecticut, and Alaska, have risen since 2022.

Austin’s Housing Boom

Austin, Texas, offers a prime example of how increased supply affects rents. The city, with the nation’s highest apartment construction rate, has seen a median rent drop of 13% since 2022. Many renters, like 27-year-old Becca Flores, have shared their surprise over falling costs. “I just got my lease renewal offer on my apartment in Austin, and it was down almost $200. That has, like, never happened to me in my life,” Flores said in a TikTok video.

Rising Rents Elsewhere

Regions with less construction, particularly in the Northeast and Midwest, have experienced ongoing rent hikes. In New Jersey, for example, rents rose 3% since 2022, reaching a median of $1,885. Local governments face challenges balancing state mandates for housing development with opposition from residents.

“We wanted to do something that would benefit current residents,” said Palisades Park Mayor Chong “Paul” Kim. The borough has allowed accessory dwelling units (ADUs) as a compromise to manage development without overwhelming public services.

The Bigger Picture

While apartment construction reached a record pace in 2024, with 67,000 units completed in August alone, opinions differ on whether there’s a true housing shortage. Freddie Mac estimates a 3.7 million-unit gap, but some experts argue that regional imbalances—not a national shortage—drive the affordability crisis.

“For affordability to improve, housing has to be built in the places people want to live,” said Rob Warnock, senior research associate at Apartment List.

Efforts to boost housing supply are vital, but experts also stress the importance of increasing incomes for low- and moderate-income renters to make a lasting impact. “The best housing program out there is the minimum wage,” said urban planning professor Kirk McClure.