As More US Multifamily Units Are Absorbed, Rental Market Fundamentals Stabilize

According to RealPage Market Analytics, a technology platform offering on-demand software and value-added services, US apartment demand was well above average in Q1, helping to push market fundamentals back toward more typical levels. At the same time, the nation’s once-in-a-generation apartment supply wave began to ease, suggesting the effects of elevated supply will start to recede over the remainder of the year.

In Q1, the US absorbed more than 138,000 market-rate apartment units, the highest first-quarter demand on record in RealPage’s 30+ year dataset. This strong performance, combined with solid absorption over the last three quarters of 2024, brought annual absorption to nearly 708,000 units—a record rate that aligns closely with the demand surge of early 2022.

As supply and demand moved toward a more balanced dynamic following several years of volatility, rent growth began to regain modest momentum. Effective rents rose 0.75% in March and 1.1% over the year ending in March, the strongest annual gain since June 2023.

However, rent growth varied across regions. The Midwest and Rust Belt led the nation, with Kansas City, Chicago, and Pittsburgh posting the highest year-over-year increases.

RealPage also pointed to mixed economic signals for the multifamily sector: employment continues to rise, though at a slower pace; consumer confidence remains under pressure; inflation is still being brought under control; and the full impact of tariffs on consumers and industry remains uncertain.