Absorption of apartment units in the U.S. has climbed 35% to start 2025. That's the first three months of the year compared to the same quarter 12 months prior. But for the fourth year in a row, more supply entered the market than was rented, though the vacancy rate held steady.
Apartments.com’s multifamily rent report for 1Q 2025 showed asking rent grew by 1.1%, the same rate as in the previous quarter. Rent per unit increased to $1,754 compared to $1,735 in 1Q 2024, and 137,750 apartments were absorbed. But, in the same quarter last year, 140,950 new ones were delivered.
“However, the gap between supply and demand has narrowed for each of the past five quarters as the market moves towards more balanced conditions,” the report commented.
Rent growth among the 50 markets studied was strongest in the Midwest, where six of the top 10 markets for asking rent growth are located, and supply has been restrained. Kansas City led with an uptick of 3.5%. Other strong gainers were Chicago and Pittsburgh at 3.3%.
In contrast, nine of the 10 weakest-performing markets for rent growth were located in the Sunbelt, where there is too much supply. Asking rents fell year-over-year in Austin (down 4.5%), Denver (down 3.6%), Phoenix (down 3.5%), and Tucson (down 2%).
Most units absorbed during the year were in the four—and five-star categories. However, since such luxury units were also in the highest supply, this segment experienced the weakest annual asking rent growth at 0.5%. In addition to the sector’s woes, it also suffered an 11.4% vacancy rate. Mid-priced assets, however, saw rent increases of 1.4% and vacancy of 7.4% at the end of 1Q 2025.
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