Economic Uncertainty Grows, But Demand Prevails

Despite softer economic fundamentals, multifamily demand remains strong. Over 138,000 apartment units were absorbed in 1st quarter 2025, a record high for the first three months of the year. Atlanta led all major markets in 1st quarter absorption, followed by Phoenix and Dallas. Anaheim was the only major market to record net move-outs during the quarter. Looking ahead, RealPage is forecasting the absorption of nearly 460,000 units in calendar 2025.

On the supply side, 1st quarter reinforced the trend that new deliveries have passed their peak. Roughly 116,000 units came online in 1st quarter, and we expect about 431,000 for all of 2025 – down about 26% from 2024’s total.

Rent growth gained momentum in early 2025, buoyed by 0.3% growth during 1st quarter specifically. Notably, this marked the first quarterly rent growth during a 1st quarter period since 2022. Among the top 50 markets, 26 outperformed the national average annual rent increase in 1st quarter 2025.

Looking ahead, RealPage is forecasting national effective asking rent growth of approximately 2.3% for 2025. Among the top 50 markets, 32% are expected to see rents rise from 3.0% to 3.9% during the year, while the largest share – about 40% – are forecasted to see growth of 2.0% to 2.9%. Another 16% of markets will see more moderate gains of 1.5% to 1.9%, while 6% are expected to see minimal growth of around 0.5%. The remaining 6% of markets – Austin, Denver and Phoenix – are projected to experience rent cuts this year, though to a much lesser extent than in 2024. Richmond is expected to lead the nation with the highest rent growth in 2025. Meanwhile, despite a solid performance in 1st quarter 2025, Washington, DC has been downgraded in the RealPage forecast due to ongoing job cuts at the federal level which are expected to weigh on the local economy and beyond.

Economic Context Influencing Multifamily

Following a strong finish to 2024, job growth got off to a slower start in early 2025. The U.S. economy added an estimated 456,000 jobs (seasonally adjusted) during the first three months of the year. Aside from the pandemic year of 2020, that was the smallest 1st quarter gain since 2011 and well below the 10-year 1st quarter average of 673,000 jobs. Federal job cuts across multiple departments, along with the administration’s new tariffs on a number of countries, have added some near-term drag on the labor market. Unless those headwinds shift, stronger job growth may be hard to come by in the short run.

Meanwhile, inflation is starting to show a bit more heat. In February, the core PCE (Personal Consumption Expenditures) Price Index rose 40 basis points (bps) after a 30-bps gain in January, raising fresh concerns that inflation could tick up again, especially as tariffs filter through supply chains.

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