Multifamily demand is expected to remain strong in the new year, mirroring the trends of 2024, according to RealPage in its year-end review and 2025 forecast.
This year, the nation saw a 50-year peak for apartment supply—a net increase of over 500,000 units—which matched the strongest renter demand in three decades besides 2021. The national occupancy rate averaged 94.3%, just slightly below historically normal figures. In addition, resident retention remained strong with lease renewals at 55%, and annual rent growth remained flat at less than 1%.
“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 to meet that demand, as seen by the nation’s stabilizing, healthy occupancy rate,” noted chief economist Carl Whitaker. “We expect this to be the year of the resident based on the increased emphasis of retention, improving affordability, and new construction coming online—giving renters more options when choosing their next apartment homes.”
For 2025, RealPage predicts supply will continue to be the key theme. Deliveries are expected to decrease as the year progresses due to economic headwinds challenging developers. 2024 saw new multifamily starts at their lowest level since early 2013, which could lead to undersupply in some markets in 2026 and beyond.
High-supply markets are expected to see concessions, pushing operators that are looking to reduce turnover and marketing costs to prioritize resident retention.
According to RealPage, demand will continue to catch up with the wave of new supply in the Sun Belt, where rent growth is expected to be modest. On the other end of the spectrum, in lower-supply markets, rents are projected to grow at a similar pace to the 2010s.
Strong wage growth outpacing slowing rent growth for two consecutive years has helped to increase apartment affordability, which is fueling more demand. New lease traffic has been supported by cooling inflationary pressure; in addition, retention has increased due to the high costs of homeownership.
“Rent growth in previous years has largely been driven by demand exceeding longstanding supply shortages in multifamily markets. When demand exceeds supply, we see rents grow faster—and we’ve been seeing recently that the reverse is also true,” added Whitaker. “The past two years of new supply hitting the market to match overall demand resulted in slowing rent growth, such as in Sun Belt metros where a wave of new supply is creating some rent relief as it outpaces demand. In the next 12 months, we expect to see more than half-a-million new apartment units deliver much-needed housing supply that matches strong demand to maintain moderation in rent prices.”
