How Utility Costs Vary by Rental Property Type

Measured across all rentals, the average leasing household in the US pays $220.42 in monthly utilities to heat and power their homes. However, as we will detail, utility costs vary widely by property type.

On an absolute basis, single-family rental (SFR) tenants pay considerably more in utility costs than other property types. Based on data from the 2023 American Community Survey, SFR homes register the highest average utility costs at about $327 per month — 56% higher than the next closest property segment.

While higher absolute utility costs for SFR households — which have larger square footage footprints and greater monthly rents than other property types — are to be expected, it is notable that the pattern still holds on a relative basis. On average, as a percent of total direct monthly housing (rent + utilities), utilities account for 18.3% of costs.

As the density of each product type increases, average utility expenses fall both in absolute terms and as a percent of total housing costs. At the other end of the spectrum are renters in large multifamily properties, where monthly utility expenses total $151 per month or about 7.9% of total housing costs.

In absolute and relative terms, renters in large multifamily properties pay less than half as much for utilities compared to their SFR neighbors.

The data above highlight some of the cost-reducing synergies created by higher-density properties. Multiple-unit buildings benefit from shared walls, ceilings, and floors, making energy use more efficient. Additionally, centralized HVAC, water heating systems, and boilers are design features that are more common in high-density properties, which also help to depress costs. Further, larger properties have a greater ability to negotiate bulk rates from utility providers.

While technology has helped to flatten the operational curve between small and larger rental properties over the past two decades, these findings underscore that density remains a powerful driver of efficiency — allowing for cost savings among landlords and tenants alike. 

Methodology Note: Utility costs are measured as the difference between gross rental costs and monthly contract rents. Households with gross rental costs equal to contract rents were assumed to have utilities included as part of their monthly rents — and were excluded from this analysis.