Apartment demand continues to cool, with advertised rent prices decreasing for only the second time since 2009, according to RealPage data. Occupancy fell slightly quarter over quarter in the three months through September to 95.4%, though the firm noted that strong retention rates indicate healthy underlying demand.
The largest rent declines occurred in Denver and Austin, both down 8%, followed by Phoenix, which fell 5%. Across the South, rents decreased 1.7% over the past 12 months, reflecting the addition of 250,000 new units — more than twice the number added in the West, which is the nation’s second-fastest growing region. Rents in the West fell 0.4%, while the Midwest and Northeast posted gains of 2.3% and 1.9%, respectively.
San Francisco led the nation in growth, up 7.1%, followed by Chicago at 4.5% over the past year.
Amid volatility, many households are staying in the apartment market longer. Since 2020, home values have risen at twice the pace of market-rate rental units, pushing typical mortgage payments above the nation’s average rent. This dynamic has driven increased resident retention, now approaching all-time highs.
Supply growth is expected to slow significantly over the next 12 months. About 105,000 units were delivered in Q3, the fewest since Q2 2023, a 35% decline from Q3 2024. Over the next year, 324,000 units are scheduled for completion, the fewest for 12 months since Q2 2020. In total, 519,000 market-rate units are currently under construction nationwide, the lowest level in more than a decade.
“RealPage believes that the continued rise in resident retention, along with ongoing new lease activity, suggests demand for market-rate apartments remains healthy,” the firm said.
“Current trends do not mirror past economic downturns, where both retention and new lease activity contracted significantly. Should strong retention persist, the multifamily industry could see an optimistic client base and improved market momentum heading into next year.”
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