The multifamily market in 2025 is set to experience significant shifts in supply dynamics as economic constraints, including rising interest rates and inflation, put pressure on high-supply metros. According to RealPage’s latest forecast, tenant retention and concessions will be key strategies in these markets flooded with new units, while areas with lower supply will likely see accelerated rent growth driven by increased competition for limited inventory.
RealPage predicts that landlords in high-supply metros will pivot toward retention tactics to manage rising turnover rates. As supply continues to outpace demand in markets like the Sun Belt, concessions will become an essential tool to attract and retain tenants. In contrast, metros with constrained supply will see stronger rent growth as competition for fewer available units drives demand.
“The multifamily housing industry has found its footing, with renter demand as strong as it’s ever been, and new housing supply has been robust enough to meet that demand, as seen by the nation’s stabilizing, healthy occupancy rate,” said Carl Whitaker, chief economist at RealPage.
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In 2024, multifamily supply hit a 50-year peak, matching the highest demand for housing in decades. This surge in supply helped stabilize the market, with absorption rates keeping pace with the influx of new units. However, with new construction slowing in 2025, supply levels are expected to tighten, particularly in regions where the construction pipeline has been especially robust.
RealPage’s analysis suggests that while the past few years have seen strong absorption and stabilization in the sector, the supply-demand dynamic is expected to shift in 2025. In particular, rental rate growth will be more modest in the Sun Belt, where new supply remains abundant.
On the other hand, markets with fewer new units, such as those in the Midwest and Northeast, will see rents climb faster due to the ongoing shortage of available rental housing.
Whitaker said the economy is expected to continue adjusting, with wage growth outpacing rent increases next year, leading to a slight improvement in affordability. However, challenges remain for renters in high-demand areas. With rents already trending downward in the Sun Belt and rising along the East Coast and parts of the Midwest, these regional shifts are likely to persist in the near term, reflecting the ongoing supply-demand imbalances.
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