Policymakers have been making the case that more supply is a better check on housing costs than rent stabilization. May apartment rental data backs up that narrative.
Rents ticked up modestly last month, the fifth consecutive month of sequential growth. But May’s reading was the lowest for that month since 2010, according to apartment data company RealPage. A more benign increase signals that new apartment deliveries are doing exactly what housing advocates predict: restraining rent growth when demand could otherwise push costs higher.
“The market’s ability to generate some demand despite macroeconomic pressures and while simultaneously working to absorb the largest block of new apartment supply since 40-plus years shouldn’t go understated,” Carl Whitaker, chief economist at RealPage, wrote in an analysis.
The data makes a case for more building, which also makes a case for zoning, entitling and permitting more new construction. Some cities and states, however, have responded to rising rents with a competing instinct: cap what landlords can charge.
Evidence suggests that the tradeoff comes at a cost.
Building boom subsiding
The country has absorbed roughly 1.5 million new market-rate multifamily units since early 2023. Developers are still delivering, even if at a slower pace than two years ago.
But the pipeline of new projects coming online is shrinking fast. Construction has dropped more than 50% from its early 2023 peak. That slowdown sets up a potential supply crunch, one that could flip the tenant-friendly market into landlord rent pressure.
Demand has held up despite a shaky economy and sluggish job growth. Lease retention is near record highs, and renters are spending a below-average share of income on rent.
“Deeper underlying demand stats indicate a sturdy foundation for demand, all the while supply continues to normalize,” Whitaker said.
Whitaker is cautious about what lies ahead. “Moving into the second half of 2026, the range of possible outcomes is large,” he wrote, noting that the labor market is showing early signs of stabilization but could use a boost.
The question is what happens when supply normalization tips into a shortage. Housing policy reformers argue that streamlining permitting, loosening zoning restrictions and fast-tracking approvals can sustain the delivery pipeline even as construction starts fall. A growing number of states have enacted laws to narrow the gap between project approval and completion.
Austin, Texas, has become a shining national example of what happens when laws are changed to ease the construction of more housing. The Texas capital has led the country in rent price decline.
Rent stabilization challenges
A Minneapolis Federal Reserve analysis offers a cautionary case from St. Paul, Minnesota. The city adopted rent stabilization in 2021 and watched multifamily permits plunge from more than 2,000 annually to 357 in 2025. One developer told Minneapolis Fed researchers the stabilization policy had a “chilling effect” on the housing market, discouraging new development.
After St. Paul amended its ordinance last year to permanently exempt new construction, developers began re-engaging with stalled projects. Housing experts also cite rent stabilization’s drag on new apartment construction in Montgomery County, Maryland.
Both cases reinforce a central tension and policy paradox: artificially protecting current renters from rent increases can discourage the supply needed to price future renters into the market.
Rent stabilization efforts continue despite the evidence. Providence, Rhode Island’s mayor vetoed a rent stabilization ordinance in May. The city council failed to override the veto, but the mayor faces a primary challenge from a lawmaker promising to institute it.
Massachusetts voters will decide in November whether to reinstate rent control, which was eliminated in the 1990s after roughly two decades of falling short of its goals.
“With operating costs rising and rent increases constrained, the per-unit sales price of apartments has fallen,” the Minneapolis Fed economists wrote. “With lower market valuation for multifamily properties, homeowners are paying a larger share of the property tax levy.”
Jay Parsons, a rental housing economist, wrote on LinkedIn that the finding presents a “huge problem” for Massachusetts voters and anyone else weighing rent stabilization.
“If you want to improve affordability, do the one thing everyone agrees on: build more housing,” Parsons wrote.
