Apartment Market Defies Expectations as Demand Surges But Rent Growth Stalls
Against a backdrop of economic uncertainty and shifting fundamentals, the U.S. multifamily market is defying expectations and rewriting the rules of supply and demand. According to a new report from RealPage, the sector remains remarkably resilient even as rent growth lags behind surging demand in the second quarter of 2025.
RealPage Chief Economist Carl Whitaker described the current market as “astonishing” in terms of absorption, noting that resilience is the defining trait of the national apartment landscape at mid-year. Whitaker emphasized that while job growth in June outperformed forecasts, the momentum is slowing, especially among white-collar workers. Excluding gains in state education and government, June’s job creation would have dropped to just 84,000. Despite sliding consumer and business sentiment and widespread uncertainty, demand for rental housing has not faltered, Whitaker said.
The numbers tell a compelling story. More than 227,000 units were absorbed in the second quarter alone, a figure RealPage calls “very strong” for this time of year. This surge pushed annual demand above the record levels seen in 2021 and early 2022. Demographic shifts and persistently high home prices and mortgage rates are keeping would-be buyers in the rental market, further fueling demand for apartments.
At the same time, new deliveries are beginning to slow. Over the past year, more than 535,000 units were completed, including 108,000 in the second quarter of 2025. While this is above the long-term average, it falls short of recent peaks, and the robust quarterly demand is putting additional pressure on supply. RealPage also reports that since 2018, major apartment markets have seen 500,000 units delayed, compounding the strain on inventory.
Yet, rent growth has not kept pace with demand. In June, rents rose by a modest 0.19%, a weaker-than-expected increase. This mild growth, according to RealPage, suggests operators are holding back on price hikes in order to maintain high occupancy rates. National occupancy averaged 95.6% in June, a slight decline from May but up 140 basis points year-over-year. The 50 largest apartment markets all saw upward trends, with the South posting a 160-basis-point increase for the year ending in June, though it remains down 1.1% on an annual basis.
Whitaker noted that the continued focus on preserving occupancy could lead to more concessions from operators, which would further temper true rent growth.
The metros leading the nation in rent growth for the year ending in June 2025 include San Francisco (6.2%), Chicago (5.4%), New York (3.8%), San Jose (3.4%), Cincinnati (3.2%), Minneapolis and Pittsburgh (both 2.7%), Kansas City (2.6%), and Boston, Columbus, Detroit, and Richmond (each at 2.5%), according to RealPage.
Source: GlobeSt/ALM