Stagnating rent growth for single-family rental homes persisted through October, dropping to its slowest pace since the aftermath of the 2008 financial crisis.
New figures from real estate analytics firm Cotality reveal single-family rents across the U.S. grew just 0.9% in October from the year before, about one-third of the 2.8% rate at which they increased over the preceding 12 months.
“While this moderation is notable, rents remain elevated compared to pre-pandemic levels,” said Molly Boesel, senior principal economist at Cotality, in the company’s latest update to its Single-Family Rent Index, which tracks changes in rent prices.
Boesel noted that the index remained 9% higher than in 2022.
In a structural market shift toward “renting for the long run,” home purchase affordability has sidelined many would-be buyers, causing demand for single-family rentals to accelerate in recent years.
However, a separate trend has emerged in 2025 that, when combined with slowing rent growth, underscores the exposure of single-family investors who make their margin on the rental cash flows their properties generate.
Rising single-family rental vacancies
John Wise, head of national production for Newfi Wholesale, has watched vacancy rates for single-family rentals pass 7% this year, a seven-year high that “nobody has been talking about.”
Property technology firm Rentometer reported in a mid-year market review that single-family home rentals house as much as 40% of the U.S. renter population.
The company’s data shows that vacancy rates for single-family rentals dipped below 5% during the COVID-19 pandemic and have remained below 6% every quarter going back to 2018 — until 2025.
As the rate of rent growth slows, dipping in some regional markets below the rate of inflation, “real estate investors will grow more cautious,” said Wise, as “real” or inflation-adjusted rental income turns negative.
“Regional value declines could cause some investors to sell,” he added. “This could be a good thing for first-time homebuyers because much of this will be entry-level housing.”
Home investors and first-time buyers often compete for the same listings, amplifying price pressures amid an affordability constrained sales environment.
Debt-service coverage ratio (DSCR) loans are business-purpose loans commonly used to finance rental purchases and are treated as a segment of the non-qualifying mortgage (non-QM) market.
Investor-buyers qualify for these loans based on the projected rental cash flow of a property, as opposed to their personal credit profile. But rising vacancy rates and negative real rental returns mean the takeout for investors is not guaranteed.
Less speculation, more discipline
Charles Goodwin, head of bridge loan and DSCR operations for investor-lender Kiavi, tells Scotsman Guide that “being smart in this environment means not assuming continued rent growth or easy occupancy.”
“It’s a return to basics for a lot of folks with less speculation and more operational and cash flow discipline,” said Goodwin, while noting that Kiavi has been “seeing investors proceeding with a lot more caution and selectivity.”
Softening rent growth reflects broader market adjustments as the housing market recalibrates following pandemic-era distortions, with some regional markets that had previously experienced outsized gains now undergoing corrections.
Florida metros, for example, have posted two consecutive years of annual declines in single-family rent growth. Single-family rents in Miami were 0.9% lower year over year in October, second to Dallas rents, which dropped 1.3% in October from a year ago.
Concurrently, more rapid deceleration in lower-end single-family rents reveals the impact of broader affordability challenges and “economic pressures” exerting greater strain on budget-sensitive renters, Cotality says.
More expensive rentals (priced 125% or more above the regional median) have demonstrated more resilience than lower-priced properties (75% or below the regional median) amid the softening, rising 1.4% in October compared to the latter’s 0.4% gains.
As rising vacancy rates exert additional downward pressure on rentals, Newfi’s John Wise says “investor appetite is still strong and the secondary market is paying higher attention to value, properties recently on the market and heavy cash-out deals.”
Resilient investor activity
Despite challenging market conditions in 2025, activity among residential real estate investors has remained elevated this year, accounting for about 3 in 10 home sales through the first half of the year and surpassing the 100,000-unit threshold in May, June and July.
William Fisher, director of wholesale sales at non-QM lender Dominion Financial Wholesale, told Scotsman Guide in September that investor-buyers “flat out just don’t have the competition from owner-occupied buyers,” allowing for greater purchase selectivity.
Strong demand from secondary market investors like insurance companies, aggregators and investment firms have provided investor-buyers with the liquidity necessary to maintain their purchase levels.
The resilience of rentals has made it attractive to other real estate investors, like fix-and-flippers, who have watched their profit margins crumble from high borrowing costs, home prices driving up the cost to acquire properties and longer sales timelines post-repair.
However, slower rent growth — or outright declines — underscores the exposure of DSCR-financed properties that are not immune to the economic pressure on renters.
Rent growth for single-family units has risen an average of 39.5% over the past five years, compared to a 23% increase in median household income, Rentometer noted, setting aside weakening labor markets and rising costs of living hammering household budgets.
“While the explosive rent growth of previous years has cooled, the fact that rents are not ‘reversing’ outside of specific correction markets like Florida suggests a stable environment for rental property acquisitions,” said Kyle Concannon, vice president of product and wholesale at Constructive Capital, in a comment shared with Scotsman Guide.
Opportunities exist for investors who know where to look, Concannon believes, like the “resilient Midwest metros” of Chicago and Detroit, which have consistently led the U.S. in rent growth in 2025.
“For mortgage brokers working with investor clients, the ‘normalization’ of the market is a sign of long-term health,” Concannon commented.
