National apartment rent growth slowed to just 1% in Q4, the second consecutive quarter of slowing rent growth as a surge in new supply outpaced demand.

Easing growth: Year-over-year rent growth dipped to 1.0% in December 2024, down from 1.1% in September, per Apartments.com. National rents averaged $1,729, up slightly from $1,712 in 2023, but fell 0.4% QoQ—the second straight decline.

Vacancy and Supply: Vacancy rates remained steady at 8.0% for the quarter. The supply-demand gap narrowed, with 133,300 new units delivered and 113,200 units absorbed in Q4. Full-year absorption rose 70% year-over-year, hitting 556,800 units, a promising indicator of market stabilization.

Regional winners: Detroit led rent growth among major U.S. markets with a 3.2% annual increase, followed by Kansas City (3.0%) and Cleveland (2.8%). Midwest markets demonstrated resilience, benefitting from limited supply growth. Regional losers: Austin saw the steepest annual rent decline at 4.8%, while Sun Belt markets such as Denver, San Antonio, Jacksonville, and Phoenix recorded declines between 2.1% and 2.9%. Oversupply remains a key challenge.

Zoom in: Luxury 4- and 5-star units absorbed over 429,000 units in Q4. However, rent growth stagnated at 0.2%, with a vacancy rate of 11.4%. Mid-priced units performed better, showing 1.3% annual rent growth and a vacancy rate of 7.3%. Improved economic confidence likely boosted demand in this segment.

➥ THE TAKEAWAY

Outlook for 2025: As the supply-demand gap narrows, more multifamily markets could stabilize. However, Sun Belt metros with heavy construction pipelines that started during pandemic migrations may continue to face pressure until absorption rates catch up to supply-driven vacancies and competition.

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