A surge of new apartment construction is putting pressure on multifamily markets across the South, leading to what RealPage describes as “slumps” in occupancy rates driven by “stout, hefty delivery volumes”. Over the twelve months ending in May, occupancy in the South tightened by 170 basis points to reach 94.8%. Yet, this figure still trailed the national average by 80 basis points, with the U.S. average sitting at 95.7%. In fact, the South was the only region where occupancy lagged behind the national benchmark, according to the report by RealPage.
While the South struggled, other regions posted stronger numbers. The Northeast led the country with an impressive 97.1% occupancy rate, standing 220 basis points above the South. The Midwest followed at 96.5%, 170 basis points higher and the West reached 95.8%, outpacing the South by 100 basis points. Of the 15 markets with the lowest occupancy rates tracked by RealPage, a striking twelve were located in the South.
Among those underperforming markets, each recorded occupancy below 95.0%. San Antonio posted the lowest at 93.1%, followed by Fort Worth and Austin at 93.8% each. Other markets on the list included Jacksonville (94.1%), Atlanta (94.2%), Houston (94.3%), Denver and Memphis (94.5%), Phoenix (94.6%), Charlotte and Raleigh/Durham (94.8%), while Salt Lake City, Nashville, and Greensboro were all at 94.9%.
Despite these challenges, the South’s May occupancy rate was still above its own pre-pandemic five-year average of 94.5%. However, about 80% of Southern markets remained below the national norm, dragging down the region’s overall performance. The root of the problem lies in the rapid expansion of inventory; new units flooded the market faster than they could be absorbed, leaving surplus space and pushing down occupancy—a textbook case of supply outpacing demand.
The hardest-hit markets offer a clear illustration. San Antonio’s occupancy dipped just below its pre-pandemic average of 93.3%, even as the metro’s multifamily unit count soared by more than 35% since 2020. Demographic changes simply couldn’t keep up with the pace of new construction. Austin and Fort Worth both saw occupancy fall to 93.8%; Austin’s rate was more than 200 basis points below its pre-pandemic five-year average, while Fort Worth’s was 80 basis points lower. Jacksonville, at 94.1%, trailed its pre-pandemic average by 80 basis points, and Atlanta, at 94.2%, was 120 basis points below its own benchmark.
Markets in the South that experienced the largest influx of new supply during the pandemic have gradually absorbed some of that inventory, helping rents and occupancy rates stabilize, though not always to the levels owners and investors might have hoped. According to RealPage, a slowdown in new construction and steady demand should help bring greater balance to the market through the rest of 2025.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more inforrmation visit Asset & Logo Licensing.
