Occupancy and Rents Expected to Grow in Desert/Mountains Region as Construction Wanes

Apartment demand has been robust across the Desert/Mountains region in recent years, but heavy supply volumes have kept occupancy and rent growth below historical norms. With record supply volumes scheduled to fall in the near term, apartment performance could rebound. Before the pandemic, annual effective asking rents in the Desert/Mountains region increased at a steady rate of roughly 4% to 6% annually. In the past four years, however, volatility has been the trend, as pricing surged in 2021 and then dropped into negative territory in 2022. Rent cuts continued with a decline of 2.7% in calendar 2024, but that is expected to change moving forward. The scheduled slowdown in construction activity coupled with strong and sustained demand could set the stage for a return to positive rent growth in 2025. Occupancy rates in Desert/Mountains markets could also rebound, going from 94.2% at the end of 2024 to a forecasted rate of 94.5% at the end of 2026. However, challenges could persist for Class A properties in high-supply markets, which could need more time to balance out as propertied work through initial lease-up.

For more information on the state of apartment markets in the Desert/Mountains region of the U.S., including forecasts, watch the webcast Market Intelligence: 2025 Q1 Desert & Mountain Region Update.