For the first time in more than two years, U.S. apartments are filling up again.

The multifamily vacancy rate fell to 5.3% in the third quarter, down from 5.5% at the end of June, according to CBRE. Renters absorbed 153,300 units, one of the highest rates of move-ins in 40 years and 72% above the prepandemic average for the third quarter.

“The first drop in vacant units in more than two years signals a crucial turning point in the multifamily sector,” CBRE Multifamily Capital Markets leader Kelli Carhart said in a statement. “This boost will lead to increased investment activity in 2025 as improving fundamentals continue to drive investor confidence [and] capital deployment.”

The vacancy dip happened despite the addition of a record 472,000 units to the national supply over the past 12 months, according to CBRE. With development slowing down — there were 661,300 units under construction at the end of Q3, down from the peak of 760,400 in Q1 — CBRE projects vacancy to fall back to its historical average of 5%.

Rent growth nationwide has been basically flat, hitting 0.3% year-over-year in the third quarter, with the average unit now renting for $2,203. But landlords in some parts of the country have been able to push rents up, while rents have continued to fall in many markets, particularly those in the Sun Belt.

The Midwest led all regions with 2.7% year-over-year rent growth, with the Northeast following at 2.3%. Austin was the worst-performing market CBRE evaluated, with average rents falling more than 8% year-over-year. Rents dropped by the second most in Jacksonville, Florida, where they fell 4.9%.

Several factors are influencing the rise in apartment demand. Renter households are growing three times faster than households buying a home. While rents have been flat or negative for the past two years, home prices have climbed more than 10% in that time, according to Redfin.

More companies pushing for in-person office work could also be boosting urban apartment demand. Apartment REIT Equity Residential said Amazon employees are leasing more units in Seattle before the company's five-day-a-week return-to-office policy takes effect in January, The Wall Street Journal reported.

The turnaround in multifamily fundamentals, coupled with increased investor liquidity, is generating more investment activity as well. More than $34B of multifamily sales closed in the third quarter, according to CBRE. While that was a decrease from Q2, without Blackstone's $10B April purchase of Apartment Income REIT, sales volume would have increased by 12%.