For the data behind the commentary, download the full Q4 2025 U.S. Multifamily Report.
Resilient Apartment Demand Anchored the 2025 Market
Apartment demand eased in the fourth quarter, reflecting the typical year-end slowdown rather than a deterioration in renter fundamentals. Net absorption remained firmly positive, underscoring resilient renter household formation despite a softer labor market backdrop. A generational surge in new deliveries expanded choices and improved affordability, while persistent affordability constraints in the for-sale market kept renters in place longer. As a result, 2025 apartment demand totaled roughly 355,000 units, marking the third-highest annual absorption in the past 25 years.
Beyond seasonality, the deceleration in fourth‑quarter demand also reflects a sharp slowdown in new construction. Apartment absorption remains closely correlated with the pace of deliveries, a relationship that is especially evident in the strongest‑performing markets in 2025. On a percentage basis, many top absorption markets continued to post elevated vacancy rates, highlighting the degree to which demand has been driven by new inventory. Of the top 10 markets for percentage increase in demand, only Boise had a single-digit vacancy rate. Huntsville (8.8%), Sarasota (8.7%) and Charleston (7.9%) led in percentage demand growth, followed by Austin (7.8%) and Charlotte (7.4%). On a nominal basis, New York led with nearly 27,000 units absorbed, followed by Dallas/Ft Worth (25,000), Austin (20,000), Atlanta (19,000) and Phoenix (15,000).
Vacancy Ticked Back Up in the Second Half
National vacancy trended higher through the second half of 2025, ending the year at 9.3%, unchanged from a year earlier but 20 basis points (bps) above midyear levels. Stabilized vacancy, which excludes apartment buildings that haven’t had time to lease up, continued to rise as new deliveries offered aggressive concessions to capture traffic, especially in highly competitive submarkets. These incentives proved effective at the top of the market: Class A vacancy inflected earlier in the year and fell bps from its recent peak, reaching its lowest level since late 2023. In contrast, Class B and C occupancy softened as renters traded up to newer product.
Regionally, vacancy expanded modestly across all regions except the Sunbelt, which posted a 10-bps YOY decline, a notable reversal after several years of outsized supply-side pressure. Improvement was most evident in former construction hotspots where pipelines have thinned. Boise and Charleston led with vacancy declines of 350 bps and 260 bps, respectively, followed by Spokane (220 bps). Austin, Jacksonville and Greenville each posted declines of roughly 170 bps over the past year. As construction activity has receded in these markets, robust demand has begun to absorb excess vacancy, moving conditions closer to equilibrium.
Rent Growth Registered One of the Weakest Figures in Recent History
Rent growth slowed sharply in 2025 as an elevated (for now) supply pipeline continued to pressure rent growth. National asking rents increased just 1.1% YOY, roughly 100 bps below the prior year and the weakest annual performance since the pandemic. Flatlining fundamentals dampened owner sentiment, though similar conditions were evident in late 2024 when vacancy also trended higher. What changed in 2025 was less about the availability of units and more about the perceived durability of renter demand, as cooling labor market conditions tempered owner confidence.
Rent growth pressures were most pronounced in the Sunbelt and West, where annual gains were limited to 0.1% and 0.5%, respectively, amid elevated competition from deliveries. Performance, however, varied meaningfully within regions. The Bay Area continued its recovery, buoyed by AI driven investment and improving leasing fundamentals. San Francisco again led the nation in rent growth, with rents rising 7.5% YOY, while San Jose recorded growth above 4%.
For the data behind the commentary, download the full Q4 2025 U.S. Multifamily Report.
