While the rental housing industry has seen a slight uptick in rent and occupancy growth so far in the second quarter, according to new data from Radix, the pace is muted compared with seasonal norms.

The market research firm predicts that apartment operators may continue to see a moderate rise in growth rates through mid-summer; after leveling off, the industry is likely to end the year with negative annual rent growth due to the continued supply pressure.

Larger markets with increased deliveries have a longer road to stabilization. These include Atlanta; Austin, Texas; and Raleigh, North Carolina, where rents were down more than 5% year over year at the end of May compared with the national average of a 1.5% decline. Other major metros are more resilient to the current trends, with Boston, Chicago, and Washington, D.C., experiencing growth rates closer to long-term averages.

According to Radix, occupancy ended the first quarter at 93.9%, showing minimal improvement and essentially flat growth. While the industry averaged 94.6% occupancy from 2018 to 2023, the new supply coming online has been a challenge. Radix noted that over 610,000 multifamily units, or 2.2% of existing stock, were delivered in the 12 months ending in May, almost a 40-year high. The firm projects occupancy to remain near the current level through the end of 2024.

Just like rent growth, certain markets are more resilient when it comes to occupancy. Nine markets had occupancy rates of 95% or higher, including New York; San Jose, California; Washington, D.C.; and Boston. Inventory growth for these four markets also averaged 2.1% for the year ending in May. However, on the other end, four markets had an occupancy rate of 93% or lower—Dallas, Austin, San Antonio, and Atlanta. These four markets saw an average inventory growth of 5%.

“The second and third quarters have the strongest demand for leases in multifamily; it’s like clockwork every year. The normal seasonal surge hasn’t happened to the same degree this year, and we are seeing very flat growth rates,” said Radix chief economist Jay Denton. “The positive news is that performance is at least holding steady as the massive wave of supply continues to hit the market. The question is what happens in the fall, especially if the economy softens. We are currently projecting rents to decline 1.1% this year at the national level, and even that could continue to decline if the job market softens.”

Radix noted that leasing indicators do not hint at any major improvement this year. Traffic counts have lagged behind 2023’s pace by approximately one tour a week. It attributed the industry’s focus on resident retention as the primary reason occupancy has held steady despite the influx of supply.

Looking ahead, Radix forecasts a more balanced market in 2025 as new supply starts to moderate.

“The economy will be the wild card,” said Denton. “But 2025 is shaping up for growth rates closer to what we saw before the pandemic.”