Market Insights | National | Mid-Year 2025
July 2025
Avg Effective
Rent
Average
Occupancy
YoY Sales
Volume
YoY Rent
Change
At the midpoint of 2025, the U.S. multifamily sector is showing clear signs of recovery after a turbulent two-year stretch of oversupply and macro uncertainty. National vacancy has reversed course, falling to 8.2% in Q2 2025—marking the first consistent decline in 13 quarters. This inflection point is largely being driven by a combination of surging apartment demand, particularly in the 4 & 5 Star segment, and a slowdown in new construction completions. Strong absorption, especially in major metros like New York, Dallas, and Phoenix, continues to chip away at elevated inventory levels.
Renter household formation is strengthening, fueled by solid job growth, demographic tailwinds, and a rising number of Gen Z adults entering prime rental years. Meanwhile, the number of new units entering the market has been steadily falling—leading to a more favorable balance between supply and demand. Rent growth has remained modest year-over-year, at 1.0%, but is expected to accelerate as vacancy tightens and deliveries dwindle.
Investor sentiment is cautiously optimistic. Sales volume is rebounding, pricing appears to have bottomed, and fundamentals are improving across much of the country. While economic and political headwinds remain, the multifamily market appears to be regaining its footing—and may be poised for more sustained momentum heading into 2026.
Employment
Labor market fundamentals continue to support multifamily demand in 2025. National job growth is holding steady at 1.0% year-over-year, with more than 139,000 jobs added in May alone. While the broader economy has cooled slightly due to inflationary pressures and policy shifts, the labor market remains resilient—especially in key sectors like leisure and hospitality (+1.07%), education and health services (+0.63%), and construction (+0.64%). These sectors are historically aligned with strong rental housing demand.
Demographics remain a key driver. Older members of Gen Z are entering the rental market in force, while many baby boomers are opting to downsize and rent in retirement—further widening the renter base. The labor force expanded by 1.5% over the past year, and population growth of 0.7% is contributing to steady household formation. Median household income rose 2.4% to $81,176, giving renters more purchasing power in most markets.
Although there are looming concerns about tariffs, interest rates, and fiscal policy, the near-term job outlook remains positive. Unemployment held at 4.1% in Q2, and wage gains have been particularly supportive of 3 Star and lower-tier apartment rent growth. If labor market strength continues, multifamily demand should remain healthy through year-end and into 2026.
| National Employment (Thousands) | Jun-25 | % ∆ from June 2024 | Net Gain |
|---|---|---|---|
| Total Nonfarm | 159,958 | 0.8% | 1,236 |
| Mining And Logging | 624 | -0.5% | -3 |
| Construction | 8,492 | 1.4% | 114 |
| Manufacturing | 12,816 | -0.7% | -92 |
| Trade, Transportation, and Utilities | 29,079 | 0.6% | 165 |
| Information | 2,961 | -0.2% | -6 |
| Financial Activities | 9,290 | 1.0% | 90 |
| Professional and Business Services | 22,715 | -0.1% | -26 |
| Private Education and Health Services | 27,131 | 3.3% | 866 |
| Leisure and Hospitality | 17,732 | 1.4% | 244 |
| Other Services | 6,107 | 1.0% | 58 |
| Government | 23,528 | 1.5% | 343 |
Source: GREA Research, Bureau of Labor Statistics
Rental Market
Rental fundamentals are showing steady improvement despite subdued overall rent growth. Effective rent growth came in at 1.0% year-over-year through Q2, but that figure masks substantial variation by building quality and geography. Demand has been most resilient in 1 & 2 Star buildings, where limited new supply and wage-driven affordability pushed rents up 1.7%. Meanwhile, 3 Star buildings saw 1.1% rent growth, while high-end 4 & 5 Star product—which bore the brunt of 2023–24 oversupply—managed just 0.7% growth. However, that segment is now showing early signs of accelerating.
Markets with low development pipelines and stable economic drivers outperformed. Midwest cities like Chicago and Kansas City and Northeast markets like Baltimore and Washington, D.C. posted rent gains above 3%. Conversely, oversupplied Sun Belt metros such as Austin, Phoenix, and Denver experienced year-over-year rent declines of more than 2%, though some are beginning to stabilize.
Of the top 50 markets in the US only 5 had shown both positive YoY rent growth and positive rent momentum from Q2 2025, indicating continued rent acceleration, while 4 showed positive momentum in Q2 but negative YoY rent growth. There are 21 markets showing positive year-over-year rent growth in June 2025 but negative rent growth since March. 20 markets are experiencing both YoY rent declines and negative momentum — a signal of weakening conditions.
While 52% of markets still show positive YoY rent growth, only 18% show improving momentum. This suggests that rent growth is decelerating in most parts of the country, with only a few outperformers like Miami, New York, and Chicago maintaining upward trends both YoY and since March.
Looking forward, improving occupancy and slowing supply growth should create conditions for stronger rent gains across all segments. Analysts expect rent growth to rise into the low-to-mid 2% range by the end of 2025. While rents may remain below their five-year averages in many major metros, a more balanced market environment is setting the stage for healthier, more sustainable rental growth.
Median Monthly
Mortgage Payment
Average Monthly
Rent (YTD)
Source: GREA Research, CoStar, RealPage Analytics
Average Rent / Vacancy
Asking Rent / Bedroom
Construction
After several years of aggressive building, the multifamily construction cycle is now contracting sharply. Higher interest rates, stricter lending standards, and ongoing cost pressures have made it significantly more difficult for developers to break ground on new projects. As a result, the number of units under construction has dropped more than 40% from its peak in early 2023, down to approximately 665,000 units as of Q1 2025.
This cooldown is especially notable in high-growth Sun Belt markets such as Dallas, Atlanta, Phoenix, and Houston—areas that were heavily overbuilt during the last expansion. Each of these metros saw construction pipelines shrink by more than 3,000 units in early 2025 alone. New project starts are now at their lowest point in over a decade.
At the same time, net absorption has rebounded strongly, outpacing new supply for the first time since 2021. In Q1 2025, absorption hit nearly 130,000 units—one of the strongest quarterly figures on record outside of the post-pandemic surge. That strength has continued into Q2, with demand concentrated in high-quality assets across major metros. This surge in absorption is helping reduce vacancy, particularly in the 4 & 5 Star segment, where lease-up velocity has picked up notably in recent quarters.
With completions slowing and absorption staying strong, the imbalance that defined 2022–2024 is beginning to correct. Developers are pulling back just as demand reaccelerates, setting the stage for a more favorable supply-demand balance going forward.
Conversions from office to residential use are also gaining traction, but their impact will remain relatively marginal. Even under generous assumptions, viable office conversions would add only about 72,000 units—equivalent to just 0.4% of total inventory.
In short, the construction landscape in 2025 is defined by discipline. And as long as demand continues to outpace deliveries, this restraint will be key to stabilizing the sector and supporting a more sustained recovery.
Multifamily Completions
Past 12 Months
Single Family
Permits
Multifamily Permits
(5+ Units)
Median Single
Family Price
Completions / Net Absorption
The combination of a shrinking pipeline and strong net absorption suggests construction has not just peaked—it’s now realigning with market fundamentals. This shift is a critical turning point for many markets previously plagued by overbuilding.
Deliveries
Supply additions reached historic highs in 2024, but the delivery cycle has now clearly crested. Over the last 12 months, nearly 597,000 units were delivered nationwide, but quarterly completions are falling fast. In Q1 2025 alone, deliveries dropped nearly 30% from the previous quarter, with projections pointing to fewer than 400,000 total units delivered in 2025—the lowest annual level in seven years.
This sharp pullback is especially notable in formerly overbuilt metros. In Dallas, 2024 saw over 42,000 completions; this year, only half that volume is expected. Similarly, Atlanta’s deliveries are forecast to fall from 25,000 units last year to just 11,000 in 2025. These declines are helping rebalance fundamentals in markets that saw significant overbuilding during the pandemic recovery phase.
Looking ahead, with the pipeline thinning and completions slowing dramatically, the supply-demand balance appears to be resetting—creating favorable conditions for improved occupancy and rental performance in the second half of 2025 and beyond.
Units Under
Construction (YTD)
12 Month
Delivered Units
| Market | Units Under Construction | % of Total UC | Units UC Delivering in Next 12 Months |
|---|---|---|---|
| Miami | 24,318 | 11.9% | 10,316 |
| Sarasota | 4,144 | 8.8% | 4,215 |
| Charlotte | 20,816 | 8.7% | 17,747 |
| Durham | 5,245 | 8.1% | 3,211 |
| Nashville | 12,757 | 7.0% | 8,860 |
| Fort Lauderdale | 10,010 | 7.0% | 3,771 |
| Phoenix | 24,231 | 5.8% | 22,663 |
| Orlando | 12,811 | 5.5% | 10,995 |
| Austin | 16,617 | 5.1% | 25,532 |
| Nothern New Jersey | 8,496 | 4.9% | 5,470 |
| Richmond | 5,258 | 4.9% | 4,222 |
| Boston | 14,042 | 4.8% | 7,819 |
| Salt Lake City | 4,839 | 4.8% | 5,263 |
| Tampa | 10,854 | 4.5% | 9,336 |
| Raleigh | 5,604 | 4.1% | 8,807 |
| Denver | 12,334 | 3.9% | 14,825 |
| Columbus | 8,208 | 3.7% | 8,897 |
| San Diego | 9,974 | 3.5% | 4,175 |
| Kansas City | 6,136 | 3.4% | 4,828 |
| Seattle | 12,435 | 3.1% | 13,910 |
| Cincinnati | 4,415 | 3.0% | 3,407 |
| Dallas-Fort Worth | 25,365 | 2.8% | 38,755 |
| New York | 42,821 | 2.7% | 36,638 |
| Atlanta | 14,412 | 2.7% | 20,743 |
| Orange County | 6,213 | 2.4% | 2,430 |
| San Antonio | 5,469 | 2.4% | 10,370 |
| Jacksonville | 3,075 | 2.4% | 6,316 |
| Inland Empire | 4,167 | 2.3% | 4,967 |
| Washington | 12,747 | 2.2% | 16,626 |
| Indianapolis | 3,784 | 2.2% | 4,662 |
| Philadelphia | 7,972 | 2.1% | 9,103 |
| Las Vegas | 3,983 | 2.1% | 5,215 |
| Minneapolis | 5,636 | 2.0% | 7,199 |
| Los Angeles | 19,234 | 1.8% | 9,380 |
| Houston | 11,475 | 1.6% | 17,028 |
| Chicago | 8,117 | 1.4% | 5,380 |
| Detroit | 3,008 | 1.3% | 1,605 |
| Portland | 2,985 | 1.3% | 5,936 |
| Baltimore | 2,776 | 1.3% | 2,116 |
| San Jose | 1,081 | 0.7% | 5,226 |
Sales
Investor activity is picking up steam in 2025 as multifamily fundamentals stabilize and pricing shows signs of bottoming. Sales volumes reached $113.3 billion over the past 12 months, a 6% increase year-over-year, following a 40% jump in Q1. While monthly trends remain somewhat choppy due to macroeconomic uncertainty, overall momentum is clearly on the rise.
Deal flow is concentrated in top-tier assets. Transactions involving 4 & 5 Star properties accounted for more than half of all sales involving 50+ unit buildings. These assets are commanding cap rates in the low-to-mid 5% range, with per-unit pricing just below $300,000. In some gateway markets, competitive bidding has driven cap rates under 5%.
Mid-market deals tell a different story. Cap rates for 3 Star properties are hovering around 6%, and price per unit has settled near $175,000. This pricing bifurcation reflects investors' increased risk aversion, with capital favoring newer, stabilized product in desirable locations.
Private capital continues to dominate the buyer pool, including high-net-worth individuals, family offices, and sponsor/operators. Institutional players and REITs remain selective but are showing signs of reentering the market. Notable transactions include Artemis’ acquisition of Berkeley Central at a 5.6% cap rate and PGGM’s $370 million purchase of Twenty Exchange in Manhattan.
Looking ahead, continued absorption strength and a declining development pipeline could sustain the rebound in transaction activity. While geopolitical and policy risks remain, confidence is returning to the market—a key ingredient for any multifamily recovery.
12 Mo. Transaction
Volume
12 Mo. Sales
Volume Growth
Market Price Per Unit
Average Sales PPU / Cap Rate
Sales velocity is rising and pricing appears to have stabilized—especially for Class A assets where cap rates are drifting back below 5% in prime markets. Investors are once again willing to pay for quality.
Team
Todd Franks
Chairman / Founding Partner
Jordon Emmott
Founding Partner
Shimon Shkury
President & Founder
Cary Belovicz
Founding Partner
Ken Wellar
Founding Partner
Greg Frick
Founding Partner
Taylor Brown
Founding Partner
Zac Thomas
Managing Director