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\u2019s median rent, at $1,274, is back to roughly where it was right before the pandemic \u2014 which means that, in 2026 dollars, it\u2019s significantly cheaper than it was in 2019.<\/p>\n
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<\/a> from the Pew Charitable Trusts\u2019 housing policy initiative, these reforms are responsible in large part for the sharp drop in rents enjoyed by Austinites over the last several years.<\/p>\n 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 \u2014 an argument that I and others at Vox have echoed<\/a> many<\/a> times<\/a>.<\/p>\n But housing markets are enormously complicated and shaped by many factors; it\u2019s challenging for researchers to measure the exact effects of policies like those rolled out in Austin. Pew\u2019s report certainly provides strong suggestive evidence that the city\u2019s policy reforms made a real difference \u2014 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\u2019s rent decline would have happened anyway, even without its full suite of YIMBY reforms.<\/p>\n 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\u2019re 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 \u2014 even as some disagree over how to solve it.<\/p>\n Austin\u2019s housing boom, explained <\/p>\n 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\u2019s rents soared<\/a> \u2014 in their case by nearly 50 percent in that period, according to data from the Census Bureau \u2014 and single-family home prices<\/a> climbed even faster. So the city sought ways to rapidly expand its housing supply to meet the surge in demand.<\/p>\n 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\u2019s adopted, Alex Horowitz, project director for Pew\u2019s housing policy initiative, told me \u2014 which was one of the most important takeaways from his team\u2019s Austin research. Those reforms have included:<\/p>\n Updating zoning codes across parts of the city to automatically allow the construction of tall apartment buildings in some places rather than requiring each to go through a long and costly permitting process. Reducing and later, in 2023, eliminating<\/a> parking minimums for virtually all new homes. (Elsewhere in the US, parking mandates \u2014 i.e., a minimum number of off-street spaces available per unit \u2014 make housing more expensive, and sometimes physically impossible, to build<\/a>.) Making it significantly easier to build accessory dwelling units (ADUs), which are smaller homes that sit alongside houses on single-family lots. Allowing<\/a> up to three homes to be built on lots zoned for single-family houses and greatly cutting down<\/a> the minimum lot size required to build a single-family home, encouraging builders to add small, less expensive starter homes. Creating density bonuses that allow developers to build taller in exchange for setting aside some units as income-restricted at lower rents \u2014 an approach that, the Pew report notes, has added more market-rate and more affordable apartments. Last year, Austin\u2019s city council voted<\/a> to legalize apartment buildings up to five stories built with a single staircase, instead of the two staircases required by default in most US building codes<\/a> \u2014 a longtime YIMBY holy grail<\/a> because it can drop the cost of new buildings and open up more space and unit layout flexibility. <\/p>\n \u201cNot many cities have taken as many different steps as Austin has,\u201d Horowitz said. That matters because passing any single reform \u2014 even if it\u2019s a big one, like Minneapolis\u2019s 2018 decision<\/a> to end single-family zoning \u2014 may not spur much home construction if an insurmountable wall of other rules still makes projects infeasible.<\/p>\n As housing advocates have put it<\/a> 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\u2019s just not enough room for all that parking.<\/p>\n Austin\u2019s broad range of policy changes meant that, between 2015 and 2024, the city managed to add 120,000 homes, Pew found \u2014 a stunning 30 percent increase in its housing stock. From 2023 to 2024, rents fell especially fast in \u201cClass C\u201d<\/a> buildings \u2014 older, less expensive buildings generally occupied by people of modest incomes. This was a particularly important finding because NIMBYs routinely oppose new-construction \u201cgentrification buildings\u201d on the grounds that they\u2019re 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<\/a>.<\/p>\n Attacking the city\u2019s 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 \u2014 although those still make up nearly half of the city\u2019s new units because they\u2019re such an efficient way to house people \u2014 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.<\/p>\n The unexpected state of the US rental market <\/p>\n But how does Austin\u2019s experience \u2014 its steep rise in home prices in the 2010s and early 2020s, and subsequent decline \u2014 compare to what\u2019s been happening in other cities?<\/p>\n Here is one interesting observation about Apartment List\u2019s latest analysis \u2014 the one that found a striking drop in rents nationwide over the last year:<\/p>\n From 2017 to 2026, the US national median rent grew by about 3 percent per year on average \u2014 less than the overall rate of <\/a>inflation<\/a> 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.<\/p>\n That happened because many metro areas, especially in the Sunbelt, built lots of new apartments in the past few years. \u201cWe\u2019ve been going through this big multi-family construction boom,\u201d Chris Salviati, chief economist for Apartment List, told me. \u201cWhen 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.\u201d Rents have fallen sharply in cities from Denver to San Antonio to Portland, Oregon.<\/p>\n Looking at that chart, you might even think, \u201cWait, what housing crisis?\u201d It turns out that many cities and their surrounding areas were perfectly capable of adding new housing to meet the early 2020s\u2019 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 \u2014 since 2017, rents in that metro area have only grown, on average, less than 1 percent per year:<\/p>\n So, are US housing markets not as catastrophically dysfunctional as we\u2019d been led to believe by the housing shortage doomsayers?<\/p>\n A more careful look at the evidence suggests it wouldn\u2019t be right to go quite that far. For one thing, we have not seen as much moderation in the cost of homes for sale<\/a> 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 \u2014 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:<\/p>\n 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\u2019s 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.<\/p>\n In fact, we know it\u2019s been underbuilding for many years: By the city\u2019s own accounting, San Francisco added<\/a> 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\u2019s woefully off track<\/a> 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 \u201cunaffordability ceiling,\u201d as Salviati put it. \u201cWe just hit a point where the market can no longer sustain prices going up by five-plus percent every year,\u201d he said. (And would-be residents of the city are simply pushed to move farther afield.)<\/p>\n 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\u2019t build much, like San Francisco, that sees plateauing prices because it\u2019s already so expensive that the market can\u2019t bear much more. And you can have a city that builds a lot of new homes relative to its existing housing stock \u2014 as Madison has over the last decade \u2014 and still sees soaring rents because it didn\u2019t 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<\/a> 22,472 homes \u2014 more than three-quarters of which were apartments in developments with at least 25 units \u2014 between 2015 and 2024. That is a lot relative to the city\u2019s size: a 20 percent increase in its housing stock. But it still underproduced<\/a> what it needed, a shortfall that quickly piles up in the shape of limited supply, high demand, and rising rents.<\/p>\n What\u2019s not in doubt is that housing supply is crucially important<\/a> 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\u2019s housing reforms is not just whether housing got built after they passed or even whether the city\u2019s rents dropped, but whether those things wouldn\u2019t have happened if not for those new laws. <\/p>\n Could the skeptics have a valid point?<\/p>\n 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\u2019t?<\/p>\n In a controversial working paper<\/a>, those researchers argued that measured housing supply constraints \u2014 like zoning codes that ban anything but single-family homes in most US neighborhoods \u2014 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<\/a> on the YIMBY narrative about Austin in a LinkedIn post earlier this year.<\/p>\n \u201cThe Austin, TX housing supply success story is something of a shibboleth in most housing circles,\u201d he wrote. \u201cOften 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.\u201d<\/p>\n The working paper has been a lightning rod in the field, drawing formal<\/a> refutations<\/a> from economists Michael Wiebe<\/a> and Salim Furth<\/a>; the authors published their own<\/a> responses<\/a> to those responses, as well as a nine-page document of frequently asked questions<\/a>. 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.<\/p>\n 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\u2019s hard to untangle whether Austin\u2019s construction boom and subsequent rent declines are the result of its new zoning policies, or simply the market\u2019s natural response to pandemic-era price spikes.<\/p>\n Home construction often happens in boom-and-bust cycles like these \u2014 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\u2019s what appears to have happened in US cities in the last few years, and it\u2019s not unreasonable to think this dynamic was at play in Austin, too. Interestingly, a 2025 post<\/a> by the National Multifamily Housing Council, a trade association for the apartment industry, made a similar argument about Austin \u2014 that its rent drops had more to do with builders responding to price signals than it did with any recent regulatory reforms.<\/p>\n Apartments under construction in Austin. Brandon Bell\/Getty Images<\/p>\n This disagreement matters not just because it\u2019s important to understand what shapes housing affordability, but also because a growing YIMBY consensus in US politics \u2014 nationally and locally \u2014 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<\/a> 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\u2019 paper was quickly taken<\/a> up<\/a> as ammunition by these development opponents.<\/p>\n 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\u2019s \u201ca cottage industry of producing anti-YIMBY, low-quality studies,\u201d Ned Resnikoff, a fellow at the Roosevelt Institute who recently wrote<\/a> a response to a few of those reports, told me.<\/p>\n When I raised all this to Pew\u2019s Alex Horowitz, I got the sense that he was annoyed at the suggestion that there\u2019s any real debate here. \u201cThe overwhelming majority of academic research papers on this topic have reached the same conclusion, which is that supply influences costs,\u201d he said. \u201cPeriodically there is a paper that comes out in a different place, but, I would say, not using conventional economic methods.\u201d<\/p>\n 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\u2019t build much in spite of this, then that points strongly to the likelihood that supply constraints \u2014 regulation, as well as geographic limits \u2014 are getting in the way. Researchers have also directly estimated<\/a> how much regulatory red tape adds to the cost of homebuilding \u2014 it\u2019s a lot!<\/p>\n Although the precise forces behind Austin\u2019s recent rent declines have not yet been thoroughly dissected in a controlled, peer-reviewed study, Horowitz said that the evidence from Pew\u2019s case study points overwhelmingly to the effectiveness of the city\u2019s building reforms. The researchers \u201cvery explicitly see that a lot of the new homes getting built [in Austin] weren\u2019t previously allowed,\u201d he said. \u201cIt just doesn\u2019t take much of a leap to see the causality there.\u201d<\/p>\n The two perspectives may not, in the end, be that hard to reconcile. Mondragon and his co-authors don\u2019t deny that housing supply shapes prices (you\u2019d 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<\/a> by other housing researchers, is weaker than it appears at first glance because the working paper does acknowledge that supply constraints \u201calmost certainly\u201d matter at the level of individual neighborhoods (the authors argue that those effects don\u2019t show up at the level of entire metro areas).<\/p>\n![\"Line](\"https:\/\/www.newsbeep.com\/us-tx\/wp-content\/uploads\/2026\/04\/LZlBA-rents-are-falling-across-the-us-and-in-austin-most-of-all-.png\"\/)
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