- Multifamily construction starts fell 13.5% YoY, sharply reducing new supply entering the market.
- Equity Residential, AvalonBay, UDR, and MAA reported modest revenue growth in 2024, but expect stronger gains in 2025.
- Tight housing markets in the Northeast, Midwest, and West Coast support rent growth, while the Sun Belt faces an oversupply.
- High mortgage rates continue to make renting more attractive than homeownership, driving strong lease renewals.
- REITs remain cautious about economic risks tied to inflation, tariffs, and potential recession pressures.
With multifamily construction falling sharply, multifamily REITs are optimistic about rent growth in 2025, particularly in coastal markets where supply is constrained, per Bisnow.
Expecting Higher Rents
The pace of new apartment deliveries across the country is expected to slow down even more this year, leaving top multifamily REITs feeling confident about rent hikes.
Executives from Equity Residential, AvalonBay, UDR, and MAA reported that tenant demand remains strong, especially in tight supply markets.
“Relative affordability versus alternative housing options remains decidedly in our favor,” said UDR CFO Joseph Fisher during the company’s earnings call. The firm expects revenue growth of about 2.3% in 2025 as rental demand persists.
Census Bureau data show that multifamily housing starts fell 13.5% year over year in January, a steep drop from 2024’s record-setting construction boom. Equity Residential CEO Mark Parrell noted that new deliveries in 2026 could be 30% below pre-pandemic levels, further supporting rent growth.
Get Smarter about what matters in CRE
Stay ahead of trends in commercial real estate with CRE Daily – the free newsletter delivering everything you need to start your day in just 5-minutes
From Coast to Coast
While supply concerns have eased for many REITs, Sun Belt cities such as Austin and Nashville are still absorbing excess inventory.
“New supply deliveries continue to be a headwind in many of our markets, but the trends support expected improvement throughout 2025,” said Tim Argo, EVP at Mid-America Apartments.
Despite oversupply challenges, REITs continue to invest in high-growth markets:
- AvalonBay (AVB) acquired two properties in Austin and Denver for $185.5M.
- Camden Property Trust (CPT) purchased a 352-unit community in Austin for $67.7M.
- Equity Residential (EQR) added 795 units across Atlanta and Denver for $274.3M.
Looming Uncertainty
Though REITs remain bullish on rental growth, executives acknowledged broader economic uncertainties. Rising inflation, potential tariffs, and policy shifts could impact consumer spending and housing affordability.
“We certainly acknowledge that there is a higher level of uncertainty in the forward path of the economy than usual,” said Parrell. Camden CEO Ric Campo also warned that a recession in 2025 could disrupt growth projections.
Still, many REITs are optimistic that rental demand will remain strong. “We’re confident that as we move into spring, we’ll be able to push pricing upward,” Argo said, reflecting the sector’s expectation of a strong leasing season ahead.
