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Despite multifamily demand recovering to above-normal levels in the first quarter, high apartment supply is weighing down rent and occupancy figures, according to data from RealPage Market Analytics.

In the first quarter, the nation absorbed 103,826 apartment units on net. This brought annual demand to stand at 317,241 units absorbed in the year ending first quarter. According to RealPage, the rate registered about 20% higher than a typical annual absorption from the 2010s decade.

“Fueling this demand strength is a confluence of factors, including persistent wage growth, which has now outpaced rent growth for 16 straight months; solid job growth; demographic tailwinds; and arguably the lowest level of move-outs from apartment units and into single-family homes since the Great Financial Crisis,” said Carl Whitaker, senior director of research and analysis at RealPage.

However, RealPage noted that even higher-than-average demand was not keeping pace with the elevated supply that delivered. In the first quarter, 135,652 units were completed. In the year ending first quarter, 479,367 new units were delivered, representing a 10% increase from the prior quarter.

“New apartment supply continues to be the primary influence on national performance. We’re sitting at the highest annual supply figure dating back to 1986 when approximately 550,000 new units were delivered,” said Whitaker. “Though it’s important to note that today’s relative expansion rate of 2.5% remains comfortably below the 1986 expansion rate of 3%.”

Also of note, according to RealPage, is the difference between supply and demand narrowed in the first quarter to its lowest delta since mid-2022. The mismatch decreased to approximately 160,000 units—a historically high figure but much lower than the over 530,000-unit delta seen a year ago.

Rent growth for professionally managed apartments has remained nearly flat as of March, inching up just 0.2% year over year. That mirrors February’s annual rate, indicating as the imbalanced relationship between supply and demand narrows that rent growth will likely remain muted for the remainder of the year.

“This interplay between supply—much higher than usual—and demand—strong but trailing supply—is the crux of today’s modest rent growth,” he added.

Occupancy averaged 94.1% nationwide as of March, matching February’s rate and in line with the long-term average.

According to RealPage, markets with very modest new supply grew rents at the fasted pace in the first quarter. Of the 12 major markets with annual effective rent growth of 2.6% or higher in March, all but two—Columbus, Ohio, and Indianapolis—posted annual inventory growth below the national norm.

On the other end, the markets that delivered the most supply tended to experience the most downward pressure on rent growth. Of the 11 markets that saw annual rent cuts of 2.5% or more, all posted annual inventory growth above the national norm. Austin, Texas; Atlanta; and Dallas—markets that are delivering the most new supply—were among the national laggards for rent cuts in March.