Every 10-year rental projection rests on a guess about rent. Leave the guess at zero and the house looks like a slow bleed. Set it at 3% and the same house looks like a pension. The gap between those two versions is not small, and you do not have to invent the number that decides it.
What is the average rent increase per year?
The Bureau of Labor Statistics measures it every month. In the August 2026 CPI tables, rent of primary residence was up 2.7% over the previous 12 months, before seasonal adjustment.
That is slower than it was. The same line read 3.5% in the 12 months to August 2025 and 5.0% in the 12 months to August 2024. Three readings are not a forecast. They do tell you that the number you remember from two years ago is not the number today.
What does that 2.7% actually count?
Rent that tenants are paying, not rent that landlords are asking. BLS collects rent from each unit in its housing sample every six months, and it says that “most rents included in the sample are continuing rents, and only a minority of observations are rents which have changed since the previous observation period” (BLS on rent and owners’ equivalent rent).
So the index is mostly made of renewals. That is a good match for a house you plan to hold, because renewals are most of what your house will see too. It also means the index moves more slowly than the price on an empty unit does. A headline about rents in one city is usually about asking rents, which is a different measure.
Which number belongs in your projection?
Three defensible choices, depending on what you are trying to find out:
- Zero. Rent never rises again. Use it as the floor, not the plan. If a house works with rent frozen for a decade, its answer does not depend on a guess.
- Something near the national figure. 2% to 3% a year keeps you in the neighborhood of what the index has actually done.
- Your own market, if you have the history. A city with falling population and a city adding jobs are not going to track each other, and neither will track the national average.
What you should not do is type in the number that makes the deal work and move on.
What 2.7% does to one house over 10 years
Here is the house the rental calculator opens with. It costs $250,000 with 20% down on a 30-year loan at 7%, and rents for $2,750 a month. Property taxes are $3,000 a year and insurance is $1,400. Five percent comes off for empty months, 10% of rent goes to repairs and a reserve for the big ones, and a manager takes 8%. Costs that are not tied to rent grow 2% a year, and the house gains 3% a year in value. Those are the example’s own assumptions.
Year one is $420 a month in both versions, because rent growth does nothing until year two. By year 10 they have come apart.
| Rent frozen | Rent +2.7% a year | |
|---|---|---|
| Rent | $2,750 | $3,495 |
| Empty months (5% of rent) | −$137 | −$174 |
| Property taxes | −$299 | −$299 |
| Insurance | −$139 | −$139 |
| Repairs and the reserve (10% of rent) | −$275 | −$350 |
| Property management (8% of rent) | −$220 | −$280 |
| Mortgage | −$1,331 | −$1,331 |
| Cash flow each month | +$349 | +$922 |
These are example figures, not a forecast for any market.
Look at the frozen column. It clears $349 a month in year 10, down from $420 in year one. Nothing went wrong. Taxes and insurance kept climbing at 2% a year while the rent stood still, and nine years of that took $71 a month off the bottom line. Standing still costs money.
What it adds up to by year 10
| Rent growth | Rent in year 10 | Cash flow / mo, year 10 | 10 years of cash flow | 10-year return | |
|---|---|---|---|---|---|
| 0% | $2,750 | +$349 | $46,249 | 15.3% | |
| 2% | $3,287 | +$762 | $70,381 | 17.5% | |
| 2.7% | $3,495 | +$922 | $79,453 | 18.3% |
The last column sells the house at the end of year 10, after 3% a year of growth in value, pays 7% in selling costs, clears what is left of the loan, and works out the yearly return on the $57,500 that went in at the start. That measure is the internal rate of return, and what counts as a good one is its own question.
Between frozen rent and 2.7%, the cash flow over 10 years differs by $33,204. The house, the loan, the rate and the price never changed.
What would stop you raising the rent?
Mostly two things. The first is that nobody is competing for the unit. The Census Bureau’s Housing Vacancy Survey put the national rental vacancy rate at 7.3% in the second quarter of 2026. Your block is not the nation, but the local version of that number is what decides whether a $75 increase gets signed or gets you a 30-day notice. What vacancy rate to use covers how to find it.
The second is the law. Some states and cities limit how much rent can go up and how much notice you have to give. That is a local question with real penalties attached, so read your state and city rules or ask an attorney before you build an increase into a plan.
There is also the ceiling the market sets. An index rising 2.7% nationally does not mean your three-bedroom can ask 2.7% more than the identical one two streets over. What rent you can charge starts from comparable units rather than from a percentage.
Write down where your number came from
Put the rent growth figure in your notes next to its source. If it came from the national index, say so, and use 2.7% or round down to 2.5%. If it came from your own market, keep the data.
Then run the house again with rent frozen and read the first table’s left column. That is the version that has to hold up, because it is the only one that assumes nothing.