Apartment List has only recently come out with its latest report. That’s just one thing it reflects—it reflects that apartment rents across the United States stopped increasing between June and July. The national multifamily vacancy rate recently rose to an all-time high of 7.1%, while the national median rent was a lofty $1402. The rental market has experienced a huge paradigm shift. There’s definitely more inventory out there, and rents are down a little from last year at this time.
In July, it only required an average of 28 days to rent an apartment once it was listed. Though rents didn’t change from the month of June, they were down 0.8% since July of 2022. This further trend suggests that the previously hot rental market is cooling as supply continues to outpace demand.
It acknowledges that the market has probably already passed the peak of the new construction cycle. More than 600,000 new multifamily units were added last year, marking a considerable 65% surge from 2022. That supply wave may be receding, but the market still experienced a profound amount of units in H1 this year. In fact, those units were well above the long-run average.
“All of our key indicators are pointing toward ongoing sluggishness in the multifamily rental market – rent growth is slipping and the vacancy rate is at an all-time high,” – the report
This drop in rents has proven most drastic in areas that used to grow quickly. The most pronounced reductions have been across the South and the Mountain West. In sharp contrast, San Francisco was the surprising exception, where rents have shot up 4.6% over last year. At this point in time, Austin, Texas, is contending with the weakest rental market in the country. That said, rents are still down 6.8% since last July.
Measured statewide, Denver and Phoenix both lead the nation in year-over-year rent declines. Markets such as Fresno, California, and Chicago are holding up. In July, rents skyrocketed everywhere—up in 37 of the 54 metros with at least one million residents. This was still up 66% from June.
One possibility behind rising vacancy rates is that our current market is overbuilt. With interest rates remaining high, construction activity will be forced to slow even further in the second half of this year and throughout 2026. This is a big change that could change market conditions dramatically.
“Although the supply wave is receding, the number of units that hit the market in the first half of this year was still above the long-run average. With construction expected to slow further in the second half of this year and into 2026, conditions are likely to shift,” – the report