Apartment Rent Growth Expectations at the Market Level for 2025
While apartment rent growth is expected to pick up in the coming year – while still trailing previous decade norms under the weight of new supply – market-level expectations vary based on many factors. Generally speaking, rent growth expectations in 2025 at a market-level can be split into a few categories.
Markets Expected to Outpace the U.S. Average in 2025
1. Markets with Minimal-to-Modest Supply Pressure and Stable Demand
Chicago, Cincinnati, Indianapolis, Kansas City, Pittsburgh, Richmond and Virginia Beach
Markets that fit within this bucket can largely be classified as slow-and-steady. This overlaps with markets spanning across the Midwest and Northeast/Mid-Atlantic regions. These metro areas are generally expected to see little (if any) supply pressure going into 2025 while their local economies churn out a slow (yet steady) stream of apartment demand. Markets within this tranche will likely see rent growth hold around otherwise historically normal levels, ranging between 3% to 4%.
2. Gateway/Gateway-Adjacent Markets Where Occupancy Supports Historically Normal Rent Growth
Boston, Inland Empire (Riverside), Newark (Jersey City), Orange County (Anaheim), San Francisco/San Jose, Seattle and Washington, DC
After a tumultuous few years characterized by outbound migration and sluggish urban core leasing activity, most coastal Gateway markets appear to be back on level footing, nearing their previous decade occupancy norms. Many of these markets are near (if not slightly past) their local supply peaks as well, which suggests that demand should soon begin to outpace supply. As such, these markets should begin to see locally tight occupancy readings to support rent growth in-line with previous decade expectations, ranging from roughly 3% to 4%.
Markets Hovering Around the U.S. Average in 2025
3. Markets with Little Supply, but Demand Headwinds Curb Rent Growth
Baltimore, Cleveland, Greensboro-Winston Salem, Memphis, Milwaukee, Philadelphia, Sacramento and St. Louis
The U.S. overall is slated to grow its existing apartment stock by roughly 3% in 2025 with 28 of the nation’s 50 largest markets scheduled to deliver a smaller percent. Seven of these markets are those included in the aforementioned group (minimal supply and stable demand), leaving 21 markets with inventory growth expected to trail the U.S. average. Within these 21 markets, there is a split between markets where demand is likely limited enough to keep the markets behind their peers but still trending ahead of the national average. These markets are expected to see roughly 2% to 3% rent growth in 2025.
4. Sun Belt Markets At (Or Even Slightly Past) Peak Supply
Dallas, Houston, Las Vegas, Orlando, Salt Lake City, South Florida (Miami Area) and Tampa
As shared previously, the balance between supply and demand is the key driving influence behind rent growth. While the Sun Belt is often thought of as one continuous group of metro areas, the 2025 forecast suggests that it will be useful to view Sun Belt markets through a differing set of lenses in the coming months. The easiest to spot differentiator within these metro areas is when peak supply arrives/has arrived. Considering that supply pressure (important to note: not demand softness) is largely the driver behind lagging 2024 performance, one might assume that 2025 should see these markets rebound closer in-line with the national average. Expectations for rent growth in these markets generally ranges between 1.5% to 2.5%.
Markets Expected to Lag Behind the U.S. Average in 2025:
5. Markets Where Weaker-Than-Expected Demand Has Challenged Fundamentals
Atlanta, Los Angeles, Minneapolis, Oakland, Portland and San Diego
Though rebounding economic growth for West Coast markets has boosted recent sentiment, markets such as Los Angeles, Oakland, Portland and San Diego still have underlying demand softness, which has resulted in lagging performance despite manageable inventory growth. But underlying demand softness hasn’t been unique to just the West Coast. Markets such as Atlanta and Minneapolis, for example, have struggled to gain traction in recent quarters due to persistent demand softness. Expectations for rent growth in these markets ranges from roughly 0% to 2%.
6. Markets Where Supply Pressure Carries into 2025 (And Potentially Into 2026)
Austin, Charlotte, Phoenix, Raleigh/Durham and San Antonio
As previously shared, the Sun Belt market profile has been lumped together en masse the past few years characterized by lots and lots of supply and strong demand. Though strong demand persists throughout many of these markets, 2025 may be unique in the sense that the Sun Belt begins to see some inner-regional bifurcation. That is, markets past their supply peak versus those areas where supply pressure will linger for longer. Markets where supply pressure lingers for the longest (whether due to the timing of supply or the sheer volume of deliveries) are expected to see a subsequently slower recovery period. Markets in this group may struggle to see any rent growth through 2025 on an annual average basis (though could begin to see stabilizing year-over-year readings emerge in the back half of the year).
For more 2025 expectations for the U.S. apartment market, see previous posts from Carl Whitaker.
