Utility Costs Are Taking a Smaller Share of Multifamily Rent

A data-driven look at how utility costs as a share of rent have changed for multifamily renters since 2000, based on American Community Survey microdata.

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Over the past two decades, the share of rent attributable to tenant-paid utilities in multifamily housing has declined meaningfully. Data from the American Community Survey show that utilities are consuming a smaller share of total rent expenditures for multifamily renters than they did in the mid-2000s.

In the mid-2000s, utilities accounted for roughly 11–12% of gross rent for multifamily renters. The series peaked at 11.6% in 2006 and remained above 11.3% through 2011. Over the following decade, however, that share steadily declined, falling to a low of 8.8% in 2020 before ticking slightly higher in recent years.

Several structural shifts in the housing and energy markets help explain this decline.

First, the US shale boom dramatically lowered energy prices beginning in the late 2000s. Natural gas prices fell sharply after 2008 and remained low for much of the 2010s. Because natural gas plays a major role in both direct heating and electricity generation, these declines helped keep utility bills relatively contained for renters.

Second, multifamily rents grew rapidly throughout the 2010s. Following the Great Recession, strong demand for rental housing — particularly in urban markets — pushed rents upward across much of the country. Even if utility costs remained relatively stable in dollar terms, faster rent growth would mechanically reduce the share of rent going toward utilities.

Third, the energy efficiency of the multifamily housing stock improved considerably. New construction surged in the 2010s, and newer buildings generally incorporate higher efficiency insulation, windows, HVAC systems, appliances, and lighting. At the same time, building energy codes tightened and technologies such as LED lighting became widespread. These improvements reduced the amount of energy required to operate a typical unit.

Finally, population growth and new apartment development increasingly concentrated in Sun Belt markets, where heating demand is lower than in colder northern regions. This geographic shift also helped moderate utility costs relative to rent.

Taken together, these forces pushed utilities from roughly one-eighth of multifamily gross rent in the mid-2000s to closer to one-eleventh by 2020. While the share has edged up slightly in the wake of recent energy price volatility, the long-run trend highlights how changes in energy markets, building efficiency, and housing demand have reshaped the cost structure of renting.

In short, while rents themselves have risen substantially over the past two decades, the portion of rent payments going toward utilities has quietly become smaller.

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Methodology: Estimates are derived from microdata from the American Community Survey (ACS) accessed through IPUMS. Utility costs are approximated as the difference between gross rent (which includes utilities) and contract rent (which excludes utilities). Household weights are applied to calculate weighted average gross rents and weighted average contract rents for multifamily renter households. The share of rent attributable to utilities is then calculated as the difference between these weighted averages divided by the weighted average gross rent.

The analysis is restricted to renter households living in multifamily properties and paying cash rent only. Households with utilities included in contract rent are excluded.