Net rent cuts are reappearing in the U.S. apartment market, a notable shift from the post‑pandemic boom. The deepest price damage is now concentrated in a handful of supply‑heavy Sun Belt metros, even as select coastal tech hubs and Midwestern cities are still managing to push rents higher, according to RealPage.
The result is a market that looks less like a uniform cooldown and more like a split screen between overbuilt growth engines recalibrating and mature, supply‑constrained metros eking out late‑cycle gains.
Demand, Supply and Occupancy Reset
Net apartment demand turned negative in the fourth quarter, with nearly 40,400 units of net move‑outs, pulling full‑year absorption down to just over 365,900 units, the smallest annual tally since mid‑2024 and roughly in line with five‑ and ten‑year norms. That reset comes after an unusually strong post‑pandemic run and signals that the market has largely burned off the excess demand created during the boom period.
New supply is also easing but remains elevated relative to history: roughly 409,500 units completed in 2025, including about 89,400 units in the fourth quarter, marking the fourth straight quarterly decline from the cycle peak of more than 586,100 units delivered in late 2024.
With supply decelerating more slowly than demand, national occupancy slipped below the “essentially full” threshold to 94.8% at year‑end, down 60 basis points quarter‑over‑quarter and marking the second consecutive quarterly decline after five straight increases.
Rent Cuts Deepen as Concessions Spread
Effective asking rents fell 1.7% in the fourth quarter, the second consecutive quarterly decline and roughly twice as deep as typical fourth‑quarter cuts over the past five years. On a calendar‑year basis, rents ended 2025 down 0.6%, representing a second straight year‑over‑year decline and the steepest annual drop since early 2021, although still mild by historical downturn standards.
Discounting is playing a larger role in that adjustment. More than 23% of apartments offered concessions at the end of the year, with an average discount of about 7%, a combination that suggests operators are leaning on giveaways as they prioritize keeping heads in beds through the slower leasing season.
As those concessions proliferate, headline rent growth becomes harder to achieve or interpret, because any nominal rent increases must first overcome the drag from free rent and other discounts embedded in effective pricing.
Where Rent Cuts are Steepest
The sharpest price pressure is in the same fast‑growing, construction‑heavy markets that led the rent growth leaderboard earlier in the cycle, with Austin and Denver posting nearly 8% declines in 2025, the deepest in the market, according to RealPage.
Phoenix and San Antonio followed with rents slashed by about 5%, underscoring how new supply is forcing operators into more aggressive pricing strategies to maintain occupancy and compete with a large pipeline of newly delivered product.
Those metros sit within broader regional patterns. Supply‑heavy regions such as the South and West recorded rent declines both in the fourth quarter and over the past year, reflecting the sheer volume of new units that have come online since 2024.
In contrast, markets that depend more heavily on discretionary consumer spending – including tourism‑oriented metros like Tampa, Nashville and Las Vegas – continued to lose momentum through the third quarter, suggesting that weakening travel and leisure demand may be an early signal of broader economic strain on renters’ wallets.
Where Rent Growth is Holding
Even as many Sun Belt markets give back previous gains, several coastal tech hubs are still seeing rent growth, helped by a more limited new‑supply backdrop and renewed office usage. San Francisco, San Jose and New York all logged rent increases in the fourth quarter, which RealPage links in part to return‑to‑office mandates, growing investor and corporate optimism around artificial intelligence and waning construction volume relative to recent peaks.
Select Midwestern metros with modest pipelines are also still in positive territory. Chicago, Cincinnati, Minneapolis, St. Louis and Milwaukee all posted annual rent growth in the roughly 2% to 4% range in 2025, a band that sits above the national average and highlights the relative resilience of late‑cycle, supply‑disciplined markets, particularly in the Midwest and Northeast.
What the Split Market Signals for Investors
Taken together, the data showa a national apartment market no longer driven by outsized demand but by the interaction of normalized absorption with still‑elevated deliveries and local supply imbalances. For investors, the deepest rent cuts in Austin, Denver, Phoenix and San Antonio point to markets where new construction and recent underwriting assumptions are under the most immediate pressure, while rent growth in San Francisco, San Jose, New York and key Midwestern metros underscores the continued value of supply barriers and diversified demand drivers.
Nationally, the combination of negative fourth‑quarter demand, sub‑95% occupancy, deeper seasonal rent cuts and rising concessions indicates that pricing power has shifted decisively toward renters, at least in the near term.
But the same RealPage data also show that rent growth is still attainable in markets with constrained pipelines and durable employment bases, suggesting that performance in 2026 will hinge less on broad macro trends and more on how individual metros balance demand with the final wave of post‑pandemic deliveries.
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