January Rent Growth Nears Normal, But Not There Yet

Apartment rents grew at a near-normal rate in January, following seasonally typical rent cuts in the final months of 2024. January’s rate of rent growth still fell below long-term norms, however, but the marginal growth that was achieved further bolstered the thesis that the most severe rent cuts have already come to pass.

Apartment rents in market rate units grew 0.16% in January, according to data from RealPage Market Analytics. That rate fell slightly below the long-term norm for January rent growth of 0.24% from 2015 to 2024. Still, that 8-basis point delta is within a rounding difference, suggesting that rent change will continue to look more regular by historical standards as we move throughout 2025.

Notably, two regions of the U.S. logged January rent growth above their long-term norms. In the lower-supplied Midwest and Northeast regions, January 2025 rent growth of 0.31% and 0.24%, respectively, ran less than 10 bps above their 10-year averages. In the West region, January 2025 rent growth of 0.11% registered below the long-term norm of 0.28%. The supply-heavy South region posted January 2025 rent growth of 0.12%, about half the long-term average of 0.24%.

On an annual basis, rents in professionally managed market-rate apartments grew 0.6% in the year-ending January 2025. This rate still stood well below long-term norms. Regionally, only the South continued to cut rents on an annual basis (-0.8%), while near negligible growth was recorded in the West region (0.2%). The Midwest (2.9%) and the Northeast (2.7%) posted the highest rent growth in the nation.

Across the U.S., annual rent change varied widely. Rents continued to grow at the fastest clip in lower-supplied, mostly Midwest markets. Detroit, Chicago and Kansas City again reported the highest apartment rent growth among the largest markets nationally, all ranging between 3.5% and 4% growth in the year-ending January 2025.

By contrast, Austin again posted the deepest rent cuts nationally among major markets in January. Apartment operators cut effective asking rents 7.2% in Austin in the year-ending January 2025, and 4.4% in neighboring San Antonio.

In a welcomed contrast to normal seasonal patterns, apartment occupancy ticked up marginally in January to stand 10 bps above December’s rate. U.S. apartment occupancy averaged 94.9% as of January 2025, essentially mirroring historical norms.