Apartments.com Q1 2025 Multifamily Rent Report Released
Today, Apartments.com, a leading online marketplace under CoStar Group, released its comprehensive report on multifamily rent trends for the first quarter of 2025. The report offers a detailed analysis of nationwide rental market conditions, highlighting shifts in rent growth, absorption rates, supply trends, and regional market variations.
National Rent Growth Trends
As of March 2025, national year-over-year asking rent growth for apartments stood at 1.1%, remaining unchanged from December 2024. Since mid-2023, year-over-year rent growth has consistently hovered just above 1%, following a period of rapid deceleration in 2021 and 2022. The latest data suggests a continuing trend of moderate rent growth, reflecting a more stabilized rental market compared to the fluctuations experienced in previous years.
At the close of the first quarter, the national rent per unit averaged $1,754, representing a modest increase from the $1,735 recorded at the end of Q1 2024. Quarter-over-quarter, rents rose by 1.0%, marking a slight rebound after two consecutive quarters of decline. Meanwhile, the national vacancy rate remained steady at 8.1%, indicating relatively balanced supply and demand conditions.
Absorption and Supply Trends
A key highlight of the first quarter was the absorption of 137,750 rental units, reflecting a 35% increase from the previous quarter and a 12.8% rise compared to Q1 2024. This uptick in absorption signals a strengthening demand for rental properties. However, new supply additions continued to outpace absorption, with 140,950 new units entering the market during the quarter. This trend of supply exceeding demand has been ongoing since Q4 2021, but the gap has been steadily narrowing over the past five quarters, suggesting a shift toward a more balanced market.
Regional Market Performance
Regional differences in rent growth were pronounced in Q1 2025. Kansas City led the nation’s top 50 markets with a 3.5% year-over-year increase in asking rents, followed closely by Chicago and Pittsburgh, which both recorded 3.3% growth. Notably, six of the top 10 markets for annual rent growth were in the Midwest. These markets have demonstrated resilience due to their ability to avoid excessive new supply additions over the past three years, allowing rental demand to keep pace with available units.
Conversely, some Sun Belt markets continued to experience rent declines due to oversupply. Austin saw the sharpest annual decline, with asking rents falling by 4.5%. Denver followed with a 3.6% drop, while Phoenix and Tucson saw declines of 3.5% and 2.0%, respectively. Nine of the ten weakest-performing rental markets were located in the Sun Belt region, where new construction has outpaced demand, leading to heightened competition among landlords and downward pressure on rental prices.
Luxury vs. Mid-Priced Rental Markets
The report also examined performance across different rental segments. In Q1 2025, luxury apartments, classified as 4 & 5-Star units, accounted for the majority of absorbed units, with just over 103,000 units leased. However, despite strong absorption figures, this segment also exhibited the weakest rent growth, increasing by only 0.5% year-over-year. Additionally, luxury apartments had the highest vacancy rate at 11.4%, as new high-end developments continued to flood the market.
In contrast, mid-priced rental units performed better, with annual rent growth reaching 1.4% by the end of the first quarter. Vacancy rates for this segment were significantly lower at 7.4%, indicating relatively stronger demand and a more balanced market compared to the luxury segment. These figures suggest that while high-end rental properties face oversupply challenges, mid-tier apartments continue to attract steady interest from renters seeking affordability.
Broader Market Implications
The findings in the Q1 2025 report point to a rental market that is stabilizing but still navigating challenges related to new supply and regional disparities. The narrowing gap between supply and absorption suggests that, while new developments continue to enter the market, demand is gradually catching up. However, regional variations highlight the importance of location-specific trends in shaping rental market dynamics.
For renters, the current conditions present opportunities in markets experiencing rent declines, particularly in the Sun Belt, where increased competition among property owners has led to more favorable leasing terms. On the other hand, landlords in high-performing markets, especially in the Midwest, may find themselves in a stronger position to sustain rent increases due to consistent demand and limited new supply.
