Rent collections improve slightly, but late payments signal strain

On-time rent payments improved in August 2025, offering a rare positive note in a year marked by declining performance, according to new data from Chandan Economics.

Preliminary estimates for August show that 83.2% of tenants at independently operated units paid their rent on time — up 34 basis points (bps) from July. July’s figure was revised downward to 82.9%, which is the lowest level in the post-pandemic era.

While the gain in August suggests stabilization, the rate remains far below where it stood a year ago.

ompared with August 2024, the on-time payment rate is down 216 basis points. That marks the 25th consecutive month of annualized declines, with on-time collections falling by a total of 502 bps in that span.

Although the drop is less severe than July’s year-over-year deterioration of 279 bps, the sustained slide underscores that renter households remain under financial pressure, the report explained.

Late payments drive full collections

The overall rent collection picture looks somewhat better because more renters are paying late rather than missing payments entirely.

The forecasted full-payment rate for August — which includes on-time, late and anticipated late payments — rose to 93.3%, up 43 bps from the previous month.

Full collections are still down 428 basis points from their January 2023 peak of 97.6%. But the decline has been less steep than the drop in on-time payments, highlighting a growing reliance on late payments to close the gap.

The three-month moving average of late payments has climbed steadily since mid-2024 — rising from 8.8% to 11.7% as of June 2025.

Household budgets strain, debt on the rise

The increase in late rent payments may reflect structural issues in household cash flow.

In past years, late payment rates typically fell in the spring when many renters received tax refunds. That pattern broke in 2025, when late payments surged despite the seasonal cushion.

Between 2021 and 2022, inflation and slowing wage growth pushed household expenses above income levels. While wages briefly pulled ahead in 2023, costs again began outpacing earnings in early 2024, the report stated.

Still, today’s constraints differ from the early pandemic period. Job losses have not spiked, helping to explain why renters are eventually making payments, even if they’re late.

But a key risk for renters going forward is rising debt.

According to the Federal Reserve Bank of New York’s second-quarter 2025 survey on household debt and credit, non-housing debt grew by $40 billion from the prior quarter after falling by the same amount in the first quarter.

At the same time, the share of loans that transitioned into serious delinquencies — 90 days or more overdue — rose sharply across all age groups.

As debt servicing eats into household budgets, renters face harder tradeoffs between paying down debt and keeping up with rent.

Regional, property type differences

Payment performance varies by property type.

Two- to four-unit rentals recorded the strongest on-time payment rate in August at 83.8%. Single-family rentals followed at 83.3%, while multifamily properties (five or more units) lagged at 82.1%.

The West continued to post stronger collection rates than other regions.

Montana led all states with an on-time rate of 94.9%, followed by South Dakota (93.3%), Hawaii (92.5%), Wyoming (92.3%) and New Hampshire (92.1%).

New Hampshire was the only non-Western state among the top 12.

Outlook uncertain

The August improvement broke a four-month stretch of steady declines between April and July, when the national on-time payment rate fell by nearly 300 basis points.

Whether the gain marks a turning point remains unclear, the report explained.

Nationally, job growth has stalled and delinquency rates are worsening for borrowers under the age of 40. Renters who live paycheck to paycheck remain particularly vulnerable.

But if the U.S. economy avoids a recession, analysts say that rent collections may already have bottomed out.