The US apartment rental market continues to weaken, affected by excess supply and softening demand, particularly amongst young adults. In November, the national median rent fell 1% sequentially to $1,367, marking a fourth consecutive decline. Y-o-y, the drop stands at 1.1%, and is 5.2% below its 2022 peak. Meanwhile, the vacancy rate for multifamily housing reached a record 7.2%, unchanged between October and November, according to Apartment List.
This situation is explained by a massive influx of new units onto the market, even as demand declines. This year the autumn seasonal decline in rents has been amplified by a structural slowdown in household formation, particularly amongst 18-34 year olds. Nearly a third of this population still lives with their family, a record according to CoStar. The high cost of rents and difficulties accessing employment for young adults curb their residential autonomy, directly affecting rental demand.
Major publicly traded owners such as AvalonBay, Equity Residential or Camden Property Trust are feeling the pinch, posting negative stock performance. Some cities like Las Vegas, Boston and Austin are experiencing more pronounced declines due to local factors. In this context, owners are increasing concessions to attract tenants, who are turning to more affordable markets. The Midwest emerges as a pole of attractiveness, now accounting for 11 of the 30 most sought-after cities, according to Yardi. Despite an announced slowdown in construction, the imbalance between supply and demand is expected to persist in 2025, amid economic uncertainty and a fragile labor market.
