Despite rising vacancy rates, steady rental demand through 2024 helped apartment owners keep rents near record highs, with more price growth forecast this year.

Record deliveries of new apartments drove the U.S. multifamily vacancy rate to 6.1% at the end of the year, its highest point since 2011, according to a 2024 fourth-quarter report by Moody’s. But effective rents ticked up by 0.1% to $1,757 in the fourth quarter, only $12 below its peak level.

The pace of rent growth slowed last year, but Moody’s economists expect it to pick back up in 2025 as apartment construction slows down.

Moody's Senior Economist Lu Chen said that despite more than 300,000 apartment units being delivered in 2024 across 79 major metros, demand has kept pace thanks to high levels of immigration, a resilient job market and high mortgage rates.

“Just from the population, from the labor market, from wage growth, all the way to the single family homeownership front, so all factors combined, we did had a very good year in 2024 in terms of rental demand,” Chen said.

In the first full week of 2025, the average interest rate on a 30-year mortgage was 6.9%, up from 6.7% a year ago, according to Freddie Mac. Even a dip in mortgage rates in the middle of the year didn't induce a significant amount of homebuying activity.

“The effect was very marginal, which is an indication that the first-time home buyers are still very sensitive to the higher mortgage rate,” Chen said.

Landlords are still navigating their way through the influx of new supply hitting the market. The median U.S. asking rent fell 0.3% year-over-year in December to $1,594, its lowest level since March 2022, according to Redfin.

While rent growth may resume as construction slows, 2025 is expected to remain a favorable year for renters, with affordability gaps between renting and buying likely to widen.

Looking forward, Chen expects construction to slow by approximately 15% each year until 2027. Moody's expects vacancy to drop as low as 5.7% by the end of 2026, Chen said.