Multifamily Market Kicks Off 2025 with Record Absorption

The U.S. multifamily sector entered 2025 with strong momentum, signaling a shift toward healthier fundamentals across the board. According to RealPage’s latest data, more than 138,000 market-rate apartment units were absorbed in Q1—a new high for the first quarter in over three decades.

This surge in demand follows three consecutive quarters of strength, culminating in a 12-month total of nearly 708,000 units absorbed. These levels rival the peak leasing activity witnessed in early 2022, reflecting a rebound in renter activity as new deliveries begin to taper.

While new supply remains elevated—with 577,000 units delivered in Q1 alone—demand finally pulled ahead of completions. This marks a subtle but meaningful shift in balance, and suggests that the pressure from the record-setting construction pipeline may start to ease later this year.

Occupancy Gains and Stabilizing Rents

National occupancy climbed to 95.2%, reaching its highest level since late 2022. This return to historic norms reflects improving leasing velocity, particularly as more renters opt to stay put rather than brave high interest rates in the for-sale housing market.

Rent trends have also begun to stabilize. Effective asking rents grew 0.75% in March, bringing the annual rent growth figure to 1.1%—the strongest reading since mid-2023. Notably, all of the nation’s top 50 metro areas tracked by RealPage saw positive rent growth in March, an encouraging signal heading into peak leasing season.

Where Rent Growth Is Accelerating—And Where It’s Not

Leading the way on rent gains were cities in the Midwest and Rust Belt, including Kansas City, Chicago, and Pittsburgh, with San Jose and Cincinnati also posting solid year-over-year rent growth.

By contrast, oversupplied Sun Belt markets continue to feel the effects of aggressive building pipelines. Austin and Phoenix led the list for largest annual rent cuts, followed by Denver, Atlanta, and Jacksonville. Still, even in these metros, month-over-month rent increases in March hint at a gradual recovery as leasing season intensifies.

Looking Ahead

The first quarter’s performance points to a more balanced dynamic between supply and demand, setting a stable foundation for multifamily as we move through 2025. With absorption trends strengthening and occupancy returning to normal levels, the sector may be poised for a more sustainable path after years of volatility.