- National rent growth slowed to 1% in Q4, with Sun Belt markets facing oversupply challenges.
- Midwest metros like Detroit, Kansas City, Cleveland, and Columbus outpaced the national average, driven by strong demand and limited new construction.
- Detroit led all US markets with 3.3% rent growth in 2024, while Kansas City, Cleveland, and Columbus posted gains of 3.2%, 3.1%, and 2.8%, respectively.
While national rent growth slowed down in 2024, dropping from 9.9% in 1Q22 to just 1% by 4Q24, Midwest and Northeast markets emerged as the most resilient, avoiding oversupply issues seen in Sun Belt cities, as reported by CoStar.
Midwestern Moves
- Detroit, Michigan
2024 Rent Growth: 3.3% (3x YoY)
Detroit claimed the top spot for rent growth nationwide for metros with at least 75K units. Demand surged to a 3-year high, compressing vacancies by 70 bps to 7.2%. Despite the robust growth, the average monthly rent in Detroit remains affordable at $1,320, 23% below the national benchmark. Rent growth is expected to accelerate, surpassing 5% by mid-2025. - Kansas City, Missouri
2024 Rent Growth: 3.2%
Kansas City’s multifamily market experienced a 130% YoY increase in absorption, with 5.1K units absorbed in 2024. The vacancy rate improved by 90 bps to 7.9%. These factors drove a 3.2% rent growth, exceeding the market’s pre-pandemic average by 40 bps. - Cleveland, Ohio
2024 Rent Growth: 3.1%
Cleveland saw its highest absorption total in 3 years, with 1.6K units absorbed in 2024. Slower construction activity—a 30% decline in YoY completions—helped reduce supply-side pressures, contributing to a vacancy rate decline and accelerating rent growth. As new construction slows down, rent growth is expected to improve over the next 12–18 months. - Columbus, Ohio
2024 Rent Growth: 2.8%
Columbus demand reached 6K units in 2024, double the pre-pandemic average. And a 33% pullback in completions helped demand to outpace supply for the first time since 2021, leading to a 25-bp drop in vacancies. Tight market conditions are likely to sustain rent growth momentum throughout 2025.
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In Summary
The divergence in rent growth between the Midwest and Sun Belt underscores the importance of balancing multifamily supply and demand. Modest construction pipelines in Midwestern cities prevent oversupply, helping Midwestern cities maintain tighter conditions even as national rent growth slows down.
Meanwhile, Sun Belt markets facing oversupply challenges may take longer to recover, as vacancy rates remain elevated and rent growth stagnates. This highlights the advantages of measured development activity and underscoring the Midwest’s growing role in the multifamily market.
