REAL ESTATE NEWS

America's population engine is losing steam just as many of its fastest-growing real estate markets are still digesting the last decade's boom. For commercial property owners and developers, the story is no longer simply "Sun Belt or bust," but a more uneven map of slowing national growth, softening migration, and a handful of standout states still attracting people at scale.

A National Growth Downshift

Between July 1, 2024, and July 1, 2025, the United States added 1.8 million people, a 0.5% increase that marks the slowest population expansion since the early COVID-19 pandemic. That is a sharp downshift from 2024, when the country grew by 3.2 million residents and hit a 1.0% growth rate, the fastest annual pace since 2006.

The Census Bureau links the reversal primarily to a historic drop in net international migration, which fell from 2.7 million to 1.3 million over the latest 12-month period, while births and deaths stayed relatively steady. For real estate, that means the national demand backdrop is cooling even as certain states continue to command outsize shares of new residents.

Slower, But Not Evenly Spread

The slowdown is broad, but not uniform. All four census regions and every state except Montana and West Virginia saw their population growth slow or their declines deepen during the year. Yet the Midwest quietly posted its third straight year of solid gains, reversing the net domestic migration losses that defined the early 2020s.

From July 2024 through June 2025, the region logged positive net domestic migration for the first time this decade, with a modest but symbolically important net inflow of about 16,000 people after losses of at least 175,000 in both 2021 and 2022.

Ohio and Michigan illustrate the shift: Ohio swung from a domestic migration loss of 32,482 people in 2021 to a gain of 11,926 in 2025, while Michigan moved from a loss of 28,290 to a gain of 1,796 over the same period.

For commercial real estate executives, the Midwest's migration turnaround suggests that some legacy markets once written off as demographic laggards are stabilizing or improving. Positive net domestic migration, even at low levels, can support apartment absorption and neighborhood retail in core metros, especially when paired with slight gains in natural change—births outpacing deaths—experienced by several Midwestern states.

In office and industrial, the combination of improved population flows and lower baseline costs may strengthen the case for back-office functions and logistics facilities that had been drifting toward coastal and Sun Belt hubs.

The Weight of the Largest States

The largest state markets still define the ceiling for aggregate demand. California remained the nation's most populous state in 2025, with an estimated 39,355,309 residents, down slightly from 39,364,774 in 2024 and below its April 2020 population base of 39,555,703.

Texas, the second-largest state, continued to expand rapidly, rising from 31,318,578 residents in 2024 to 31,709,821 in 2025, up from 29,149,498 at the start of the decade.

Florida held third place at 23,462,518 people, up from 23,265,838 in 2024 and 21,538,207 in 2020.

New York's population ticked up marginally from 20,001,419 to 20,002,427, essentially flat compared with its 2020 base of 20,203,696, while Pennsylvania edged from 13,045,848 to 13,059,432 residents.

The rest of the top ten underscores how much demographic heft has shifted south and toward select interior states. Illinois' population rose slightly from 12,703,033 in 2024 to 12,719,141 in 2025, still below its April 2020 level of 12,821,741.

Ohio climbed from 11,860,621 to 11,900,510, Georgia from 11,204,208 to 11,302,748, and North Carolina from 11,052,061 to 11,197,968 between 2024 and 2025.

Michigan's headcount inched up from 10,099,962 to 10,127,884. For owners and investors, these figures point to continued long-term scale in Texas and Florida, renewed stability in parts of the Midwest, and incremental growth in large Southeastern states that already host deep office, industrial, and retail markets.

Where the Headline Growth Is Now

When measured by raw population gains rather than totals, Texas emerged as the undisputed growth leader. The state added 391,243 residents between 2024 and 2025, the largest numeric increase in the country. Florida followed with a gain of 196,680 people over the same period, while North Carolina added 145,907 residents.

Georgia's population increased by 98,540, and South Carolina's by 79,958. Rounding out the top ten in numeric growth were Washington, up 73,062; Arizona, up 67,394; Tennessee, up 63,785; Virginia, up 60,465; and New Jersey, up 41,861.

Those absolute increases matter for construction pipelines that were designed around years of stronger growth. Texas, Florida, and North Carolina remain large demand magnets, but the national deceleration raises the risk of oversupply in certain submarkets if projects assume 2024-style population gains instead of 2025's more restrained baseline.

In states like Washington and Arizona, steady but slower growth could still support multifamily and last-mile industrial development, especially in metro areas that continue to capture a disproportionate share of incoming residents.

For New Jersey and Virginia, more moderate net additions still reinforce dense, supply-constrained corridors where even incremental demand can support rents.

Smaller States, Bigger Percentages

On a percentage basis, smaller and mid-sized states once again dominated the growth rankings. South Carolina led the nation with a 1.5% population increase from 2024 to 2025, rising from 5,118,250 at the start of 2020 to 5,570,274.

Idaho recorded 1.4% growth, increasing from 2,000,872 to 2,029,733 residents over the year, compared with 1,839,123 in 2020.

North Carolina posted a 1.3% gain, and Texas grew 1.2%. Utah expanded by 1.0%, with Delaware, Washington, Arizona, Nevada, and Tennessee each registering 0.9% growth.

The mechanisms behind those gains differ in ways that matter for asset strategy. South Carolina's 79,958-person increase was driven largely by net domestic migration, which contributed 66,622 people, even as its growth rate eased from 1.8% in 2024.

Idaho and North Carolina also leaned heavily on domestic in-migration, reinforcing their status as relocation destinations for households leaving higher-cost states.

By contrast, Texas' rapid growth came from a mix of natural change and net international migration, even though the latter slowed sharply compared with the prior year.

Utah's 1.0% increase was driven mainly by natural change, a shift from 2024, when net international migration was the largest contributor to its growth.

What Slower Growth Means for Demand

For commercial real estate, these component differences can shape the mix of demand across property types. States that draw large numbers of domestic migrants often face immediate pressure on rentals, neighborhood retail, and logistics space as new households arrive with established consumption patterns.

Markets where natural increase is the primary driver tend to see steadier, more predictable demand for community-serving assets tied to younger populations and family formation. In states where net international migration had been a major growth engine but is now slowing, certain urban submarkets may feel a more pronounced chill, especially in segments that have relied on foreign-born tenants, workers, and students.

Despite the nation's weaker overall growth rate, the Census Bureau notes that the slowdown is not a repeat of the acute demographic shock seen in 2021. That year's 0.2% growth rate reflected elevated mortality and constrained migration during the height of the pandemic, whereas today's 0.5% rate occurs in a context where births and deaths are relatively stable.

The current deceleration is instead tied to the sharp pullback in net international migration, a variable that can be influenced by policy, global conditions, and administrative processes. For investors modeling long-term demand, that distinction suggests more room for future swings in migration than in domestic fertility or mortality trends.

A New Baseline for Market Planning

Looking ahead, the latest Vintage 2025 estimates will serve as the baseline for a series of more granular releases. The Census Bureau plans to publish population totals and components of change for metropolitan and micropolitan areas and counties in March, along with updated figures for Puerto Rico municipios.

Each annual vintage revises the full time series back to the 2020 Census, superseding prior estimates and incorporating methodological updates, including new subnational administrative data and refinements to short-term projection methods.

For commercial real estate executives, those forthcoming metro- and county-level details will be central to recalibrating growth assumptions, re-ranking target markets, and assessing which development pipelines are best aligned with the new, slower national demographic landscape.

Source: GlobeSt/ALM