Multifamily Rent Growth Slows Despite Rising Demand
The pace of new apartment deliveries has continued to slow, but new data shows that developers hoping for less competition in the coming years may be disappointed.
The under-construction pipeline for the first half of 2025 was larger than expected, according to a Yardi Matrix report. As a result, the research firm has increased its projected pace of multifamily deliveries by about 2% through 2026 and nearly 3% for 2027.
While the under-construction pipeline is still shrinking, down by 6.5% quarter-over-quarter, because of a high rate of completed projects, multifamily starts are keeping pace with the first six months of last year, keeping the pipeline elevated, according to Yardi.
The revision brings the projected completions for 2025 to 550,000 units, up from the 536,000 units projected three months ago. For 2026, Yardi predicts 430,000 units to come online, up from 422,000 projected last quarter.
Construction starts for the second half of the year are expected to slow, meaning 2027 deliveries fall to a more modest 360,000 units.
But while the future looks a little less bright for owners of U.S. apartment buildings, the demand of the present paints a prettier picture.
Nearly 536,000 units across the U.S. were delivered in the first half of 2025, above the long-term average but lower than the all-time high recorded in 2023, according to RealPage.
And amid a cooling market, demand is far outpacing supply. Renters absorbed a record 794,000 units over the last 12 months, well above the 358,000 five-year average, according to RealPage.
Occupancy sat at 95.5% for the second month in a row, according to a July report by RealPage, a slight decrease from the 95.6% from April and May but up from last year.
To keep occupancy up amid constant supply coming to the market, landlords are refraining from pushing rents. Asking rents grew by 0.2% year-over-year across the U.S., the lowest annual price increase in 10 months, according to RealPage.
The markets where landlords have less leverage continue to be in the Sun Belt. Mid-America Apartment Communities, a multifamily REIT with holdings concentrated in the Southeast, Texas and Arizona, disclosed in its second-quarter earnings release that it has lowered its projections for rent growth at its properties.
MAA Executive Vice President and Chief Strategy and Analysis Officer Timothy Argo said the company is seeing supply pressure that is resulting in weaker lease pricing, especially in its Austin, Phoenix and Nashville properties.
