- National rent growth ended 2024 at 1%, down 40 bps from Q3, as high supply continued to challenge demand.
- Detroit posted the highest YoY rent growth among major metros, with a 3.2% increase.
- Sun Belt markets, including Austin and Denver, saw some of the steepest rent declines.
- The gap between new supply and demand narrowed to its smallest point since early 2021, suggesting market stabilization in 2025.
- Luxury Class A apartments saw weaker rent growth compared to mid-tier apartments, which outperformed with stronger demand.
The US multifamily market ended 2024 with 1% annual rent growth due to seasonal slowdowns and a persistent wave of new supply, as reported by CoStar.
By The Numbers
According to Apartments.com, a division of CoStar, this marked the second consecutive quarter of declining rent growth, with national rent growth softening by 40 bps compared to the previous quarter.
The average asking rent in Q4 was $1,729, up 90 bps from a year earlier but still well below the double-digit annual growth seen in 2021 and 2022 when rents surged past 9.5%.
This slowing trend is due to the supply-and-demand gap. 133.3K new units were delivered during the quarter, while demand, measured by net move-ins, remained lower at 113.2K units.
Despite slowing rent growth, the national vacancy rate remained relatively stable at 8%, up only 20 bps from the start of the year. However, the gap between supply and demand narrowed to its smallest margin since early 2021, suggesting the market could be approaching a more balanced state.
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Midwest Outperforms
While national rent growth softened, several Midwestern markets saw stronger performance due to limited new construction.
Detroit led all major metros with a 3.2% YoY rent growth in Q4, followed by Kansas City (3%), Cleveland (2.8%), and Pittsburgh. Columbus also posted rent growth above 2.5%.
The Midwest’s outperformance was largely driven by tight supply. Many Midwestern cities avoided the inventory surges seen in coastal and Sun Belt markets.
Sun Belt Struggles
Meanwhile, Sun Belt metros continued to struggle with oversupply. Austin reported the largest annual rent decline among major metros, with a 4.8% drop in asking rents. Denver followed with a 2.9% drop, while San Antonio, Jacksonville, and Phoenix saw declines between 2.1% and 2.4%.
Unsurprisingly, there have been plenty of new construction deliveries in the region, where demand has not kept pace with supply. Despite strong population growth in many Sun Belt markets, higher vacancies have limited rent growth.
Luxury vs. Mid-Tier
Demand was strongest for Class A, luxury developments, where more than 429K net move-ins were recorded in Q4. However, the sheer volume of new high-end inventory continued to dampen rent growth. Asking rents for luxury units grew just 20 bps YoY, with vacancies rising to nearly 11.5%.
Mid-priced apartments outperformed the national average, recording a 1.3% annual rent increase and maintaining a healthier 7.3% vacancy rate. Improved consumer confidence, moderating inflation, and economic stability supported demand for these mid-tier properties—particularly in markets with less aggressive development pipelines.
What’s Next for 2025
Looking ahead, the narrowing gap between supply and demand could set the stage for a more balanced market in 2025. Although supply deliveries are expected to stay high in the near term, the pace is expected to moderate, potentially easing vacancies.
If demand continues to hold steady, particularly for mid-tier and workforce housing, national rent growth may stabilize and even begin to climb again after the seasonal slump.
However, markets with substantial construction pipelines, such as those in the Sun Belt, could continue facing downward pressure on rents until absorption rates catch up.
