Apartment rents are expected to finish 2024 barely positive, with a 0.8% increase. According to CoStar, this is largely due to new supply outpacing demand, which pushed the national apartment vacancy rate up to 7.9%.
While national rent growth may remain below 1% into 2025, reduced levels of apartment completions, combined with strong renter demand, could set the stage for increases in asking rents.
A 40-year high of 692,000 apartment units were added in 2024. Expected completions of new units in 2025 will likely decline to the mid-300,000s, despite demand appearing poised to remain above 400,000 units.
Average-quality three-star-rated apartments could lead the rent growth expansion, having finished 2024 with an average rent increase of 1.6%. However, properties in the four- and five-star price points will most likely continue to struggle to increase rents due to oversupply.
