RealPage Forecast Points to Improved Rent Growth in 2025

The U.S. economy displayed resilience in 2nd quarter 2024, adding over 532,000 jobs, bringing total job creation to over 1.3 million year-to-date, based on seasonally adjusted data from the Bureau of Labor Statistics. Our employment forecast highlights that the top markets with the most significant employment gains in calendar 2024 are expected to be New York, Los Angeles, Houston, Phoenix and Dallas.

On the supply side, our delivery pipeline anticipates just over 629,000 apartments will be delivered in calendar 2024. However, supply is expected to drop by roughly 20% in 2025, with nearly 497,000 units scheduled to complete. In terms of demand, over 612,000 apartment units are expected to be absorbed in 2024, with a 12% drop anticipated in 2025.

Despite strong demand, rent growth has been somewhat slower than expected year-to-date through 2nd quarter 2024 due to various exogenous factors. Our most recent forecast indicates that 50% of the top 50 markets should see annual rent growth between 2% and 3% in calendar year 2024. Additionally, 24% of these markets are likely to experience growth between 1% and 2%, 18% could see growth below 1%, and a few markets are anticipated to see virtually no growth at all.

Notably, only Atlanta and Jacksonville are expected to experience rent cuts of 1% or more.

Looking ahead to 2025, we anticipate a different landscape. With somewhat weaker supply, robust demand, and a more favorable economy, approximately 40% of the top 50 markets could experience annual rent growth of more than 3%. About 55% of the markets are expected to see rents grow between 2% and 3%, while a little over 5% could record growth below 2% in 2025.