How Austin’s stunning drop in rents explains housing in America

Here is one narrative violation in the usual drumbeat of doom that we’re used to hearing about housing in America: The rent, in many cities across the US, is getting cheaper.

After soaring to Covid-era highs, rents have cooled. Last month, the national median rent was down 1.7 percent from one year prior, according to research from the rental marketplace Apartment List. This made it the biggest annual decline since the company started tracking rent data in 2017.

One success story stands out among all the rest: Austin, Texas, where rents dropped by a full 6 percent over the past year, more than in any other large metro area in the US. The Austin area’s median rent, at $1,274, is back to roughly where it was right before the pandemic — which means that, in 2026 dollars, it’s significantly cheaper than it was in 2019.

For the past decade, Austin has been a standard-bearer for the YIMBY (Yes in My Backyard) movement, passing a barrage of policy changes to make it easier to build new housing, especially new apartment buildings. According to a recent report from the Pew Charitable Trusts’ housing policy initiative, these reforms are responsible in large part for the sharp drop in rents enjoyed by Austinites over the last several years.

Housing economists overwhelmingly agree that, to bring home prices down, cities need to embrace supply-side reforms that cut away the thicket of regulation that make it oddly difficult to do something as seemingly simple as build an apartment building — an argument that I and others at Vox have echoed many times.

But housing markets are enormously complicated and shaped by many factors; it’s challenging for researchers to measure the exact effects of policies like those rolled out in Austin. Pew’s report certainly provides strong suggestive evidence that the city’s policy reforms made a real difference — but remember that, since around 2022, rents have fallen nationwide, too, and in many other cities quite substantially. So it seems likely that at least some of Austin’s rent decline would have happened anyway, even without its full suite of YIMBY reforms.

How do we isolate the impacts of reforms meant to increase housing supply, figure out which ones worked, and to what extent they worked? Those are questions housing experts are taking up right now, and they’re not merely academic ones. Getting them right is how we will claw our way out of a housing affordability crisis that almost no one doubts exists — even as some disagree over how to solve it.

Austin’s housing boom, explained

In the 2010s, a local boom fueled by tech jobs drew hundreds of thousands of new residents to Austin and its suburbs. Following a trajectory familiar to other high-demand cities during that period, Austin’s rents soared — in their case by nearly 50 percent in that period, according to data from the Census Bureau — and single-family home prices climbed even faster. So the city sought ways to rapidly expand its housing supply to meet the surge in demand.

Austin is hardly the only city that has tried to unfetter homebuilding to ease its cost of living. But it is remarkable for the sheer breadth of reforms it’s adopted, Alex Horowitz, project director for Pew’s housing policy initiative, told me — which was one of the most important takeaways from his team’s Austin research. Those reforms have included:

“Not many cities have taken as many different steps as Austin has,” Horowitz said. That matters because passing any single reform — even if it’s a big one, like Minneapolis’s 2018 decision to end single-family zoning — may not spur much home construction if an insurmountable wall of other rules still makes projects infeasible.

As housing advocates have put it to me before, housing is like a door with many deadbolts on it; unlocking just one will not magically open the door for more building. You can legalize triplexes on every single-family lot in America, but if the local zoning code requires every single unit to have two off-street parking spots, the triplex will not get built because there’s just not enough room for all that parking.

Austin’s broad range of policy changes meant that, between 2015 and 2024, the city managed to add 120,000 homes, Pew found — a stunning 30 percent increase in its housing stock. From 2023 to 2024, rents fell especially fast in “Class C” buildings — older, less expensive buildings generally occupied by people of modest incomes. This was a particularly important finding because NIMBYs routinely oppose new-construction “gentrification buildings” on the grounds that they’re unaffordable to all but the affluent. But by the laws of supply and demand, building new homes in an area lowers the cost of housing across the board, including older, cheaper units, a phenomenon that has been demonstrated empirically.

Attacking the city’s housing shortage from so many different angles has also accomplished another thing, Horowitz pointed out. Austin has built an unusually diverse mix of new homes, including not just apartments in large buildings — although those still make up nearly half of the city’s new units because they’re such an efficient way to house people — but also smaller apartment buildings, single-family homes, and townhouses. These varied options give residents more choice in where to live, and also may help retain people in the city as they have families and seek more living space.

The unexpected state of the US rental market

But how does Austin’s experience — its steep rise in home prices in the 2010s and early 2020s, and subsequent decline — compare to what’s been happening in other cities?

Here is one interesting observation about Apartment List’s latest analysis — the one that found a striking drop in rents nationwide over the last year:

From 2017 to 2026, the US national median rent grew by about 3 percent per year on average — less than the overall rate of inflation during the same period. The early 2020s run-up in rents ended up being partially canceled out by a sustained (if uneven) decline that began in 2022.

That happened because many metro areas, especially in the Sunbelt, built lots of new apartments in the past few years. “We’ve been going through this big multi-family construction boom,” Chris Salviati, chief economist for Apartment List, told me. “When we started to see rent growth softening over the past couple of years, I think that was expected because we had all these units that were getting completed.” Rents have fallen sharply in cities from Denver to San Antonio to Portland, Oregon.

Looking at that chart, you might even think, “Wait, what housing crisis?” It turns out that many cities and their surrounding areas were perfectly capable of adding new housing to meet the early 2020s’ surge in demand. So were restrictive zoning codes really holding them back in the first place? Rent increases have even moderated over the last decade in notoriously unaffordable markets like San Francisco — since 2017, rents in that metro area have only grown, on average, less than 1 percent per year:

So, are US housing markets not as catastrophically dysfunctional as we’d been led to believe by the housing shortage doomsayers?

A more careful look at the evidence suggests it wouldn’t be right to go quite that far. For one thing, we have not seen as much moderation in the cost of homes for sale as we have in rentals. And housing markets are hyper-local, so nationwide rent averages obscure a lot of regional variation. Plenty of cities have seen rapid recent growth in housing prices that have far outpaced inflation — like Madison, Wisconsin, where I live, where rents have climbed by more than 7 percent per year on average between the beginning of 2017 and 2026:

Coastal superstar cities like San Francisco, meanwhile, were already at a hyper-expensive baseline pre-pandemic because their home prices had been frog-boiling toward unaffordability over the course of decades. That is part of what’s pushed many Americans to move to cities like Austin (and Madison, for that matter) in search of good jobs and greater affordability. And that rents have slowed in the Bay Area is not necessarily evidence that the region has built enough housing to meet demand.

In fact, we know it’s been underbuilding for many years: By the city’s own accounting, San Francisco added 211,000 jobs from 2009 to 2019, creating a need for 154,000 housing units, but it built only 29,500 homes in that period. It’s woefully off track to meet its homebuilding goals this decade, too. So the relatively flat rents in the city may more likely suggest that it has hit an “unaffordability ceiling,” as Salviati put it. “We just hit a point where the market can no longer sustain prices going up by five-plus percent every year,” he said. (And would-be residents of the city are simply pushed to move farther afield.)

Causation is tricky to prove in housing markets, though, and looking at short-term price changes alone can easily lead to misinterpretation. You can have an extremely high-demand metro that doesn’t build much, like San Francisco, that sees plateauing prices because it’s already so expensive that the market can’t bear much more. And you can have a city that builds a lot of new homes relative to its existing housing stock — as Madison has over the last decade — and still sees soaring rents because it didn’t build enough to accommodate all the people who want to move to the area, and still had more room to absorb rent growth. Madison, for example, added 22,472 homes — more than three-quarters of which were apartments in developments with at least 25 units — between 2015 and 2024. That is a lot relative to the city’s size: a 20 percent increase in its housing stock. But it still underproduced what it needed, a shortfall that quickly piles up in the shape of limited supply, high demand, and rising rents.

What’s not in doubt is that housing supply is crucially important in shaping costs. And post-pandemic, many US cities showed an unexpected ability to add enough supply to push down some of the prices that caused Americans so much heartburn around the pandemic years. The relevant question for judging the ramifications of Austin’s housing reforms is not just whether housing got built after they passed or even whether the city’s rents dropped, but whether those things wouldn’t have happened if not for those new laws.

Could the skeptics have a valid point?

I first became obsessed with that question when, a few months ago, I stumbled on a fascinating (to a weirdo like me) bit of economics drama. Although most experts would tell you that reforming restrictive zoning laws in hot markets like Austin will bring down home prices, a contrarian group of economists recently dared to ask: What if it doesn’t?

In a controversial working paper, those researchers argued that measured housing supply constraints — like zoning codes that ban anything but single-family homes in most US neighborhoods — may not matter much for home prices across US metro areas, actually. One author of that paper, economist John Mondragon, a research adviser at the Federal Reserve Bank of San Francisco, cast doubt on the YIMBY narrative about Austin in a LinkedIn post earlier this year.

“The Austin, TX housing supply success story is something of a shibboleth in most housing circles,” he wrote. “Often the large decline in Austin house prices or rents over the last few years is marshaled as evidence. Unfortunately, I do not find this kind of casual look at the data to be very illuminating.”

The working paper has been a lightning rod in the field, drawing formal refutations from economists Michael Wiebe and Salim Furth; the authors published their own responses to those responses, as well as a nine-page document of frequently asked questions. Fully accounting for the dispute is outside the scope of this piece (to understand it, one economist encouraged me to contact a theoretical econometrician, which is like an economist but with even more math). But suffice it to say that as a working paper, it should be taken with a hefty serving of salt.

Regarding Austin, however, Mondragon raises a valid point. The city, like so many others, saw an extreme rise in rents early in the pandemic; that tends to induce developers to build more so they can benefit from high prices. So it’s hard to untangle whether Austin’s construction boom and subsequent rent declines are the result of its new zoning policies, or simply the market’s natural response to pandemic-era price spikes.

Home construction often happens in boom-and-bust cycles like these — developers build lots of housing until the supply glut pushes prices down, which reduces the incentive to build more and often limits how much further prices can be reduced. That’s what appears to have happened in US cities in the last few years, and it’s not unreasonable to think this dynamic was at play in Austin, too. Interestingly, a 2025 post by the National Multifamily Housing Council, a trade association for the apartment industry, made a similar argument about Austin — that its rent drops had more to do with builders responding to price signals than it did with any recent regulatory reforms.

This disagreement matters not just because it’s important to understand what shapes housing affordability, but also because a growing YIMBY consensus in US politics — nationally and locally — is still a fragile one, and it needs to be able to answer challenges and counterarguments, and think carefully about causation. Local policy leaders increasingly agree that there is a relationship between housing supply and housing prices, just like the basic economic forces at play in markets for all kinds of goods. But many communities across the US are still pushed about by NIMBYs who advocate fiercely against allowing more housing construction. Mondragon and his co-authors’ paper was quickly taken up as ammunition by these development opponents.

Meanwhile, a steady drip of other reports, sometimes sloppy, uncontrolled ones authored by non-economists, still downplay the role of housing scarcity in driving high home prices. It’s “a cottage industry of producing anti-YIMBY, low-quality studies,” Ned Resnikoff, a fellow at the Roosevelt Institute who recently wrote a response to a few of those reports, told me.

When I raised all this to Pew’s Alex Horowitz, I got the sense that he was annoyed at the suggestion that there’s any real debate here. “The overwhelming majority of academic research papers on this topic have reached the same conclusion, which is that supply influences costs,” he said. “Periodically there is a paper that comes out in a different place, but, I would say, not using conventional economic methods.”

Economists have estimated the importance of supply constraints on housing using a range of methods: If home prices in a city far exceed the cost of building a home, for example, like they do in the most expensive US cities, then that ought to induce developers to want to build more because they stand to profit a great deal. If they don’t build much in spite of this, then that points strongly to the likelihood that supply constraints — regulation, as well as geographic limits — are getting in the way. Researchers have also directly estimated how much regulatory red tape adds to the cost of homebuilding — it’s a lot!

Although the precise forces behind Austin’s recent rent declines have not yet been thoroughly dissected in a controlled, peer-reviewed study, Horowitz said that the evidence from Pew’s case study points overwhelmingly to the effectiveness of the city’s building reforms. The researchers “very explicitly see that a lot of the new homes getting built [in Austin] weren’t previously allowed,” he said. “It just doesn’t take much of a leap to see the causality there.”

The two perspectives may not, in the end, be that hard to reconcile. Mondragon and his co-authors don’t deny that housing supply shapes prices (you’d be laughed out of the field for suggesting otherwise). However you slice it, we need a sufficient supply of housing in order for housing to be affordable. The authors are, rather, unconvinced that constraints like zoning are meaningfully holding back supply. But even that claim, which has been ferociously contested by other housing researchers, is weaker than it appears at first glance because the working paper does acknowledge that supply constraints “almost certainly” matter at the level of individual neighborhoods (the authors argue that those effects don’t show up at the level of entire metro areas).

Ultimately, we need not wait for perfect evidence to be able to speak about what is, to the best of our understanding, likely happening in the American housing market. It seems unlikely to be a mere coincidence that the cities that had the greatest recent rent declines are concentrated in the Sunbelt, which tends to have fewer constraints on building housing than coastal cities. Even within that region, Austin outperformed both in how many homes it added and in how much prices dropped: “Austin is the market that has built the most new multi-family housing per capita by a pretty wide gap,” Salviati said.

Is it possible that all those new homes and lowered rents had nothing to do with Austin’s aggressive push to make it easier to build more homes? Perhaps, and maybe peer-reviewed research will eventually find that Austin’s zoning changes weren’t as big a deal as YIMBYs thought, though my hunch is that they’ll end up mattering quite a lot. In the meantime, there is every reason for New York, Boston, San Francisco, Los Angeles, and their suburbs to try the same experiment in housing abundance that Austin has. They can start with what Horowitz calls the “one-two punch” of policies for improving housing affordability: allow apartment buildings to be built by right in as many places as possible, and reduce parking mandates.

And like any good experiment, we’ll need exacting analysis to know how it’s working. Maybe I’ll call that theoretical econometrician after all — or at least ask my mayor to.