The ratio of U.S. apartment renters renewing their leases has climbed in the last year. Just over 54% of renters in market-rate apartments renewed their leases in the year-ending October 2024, which was a 120 basis point (bps) climb over last year, according to RealPage Market Analytics.
Operators have pivoted to focus on retention in the last 24 months as supply levels continue to reach record levels across much of the nation, resulting in above average retention rates. Keeping existing residents in place by renewing leases is what some refer to as keeping the “back door” closed, which allows all new leases signed (or “front door” traffic) to act as net absorption of units occupied.
Renewal rates are calculated on a trailing 12-month basis to eliminate seasonality as renewals typically go up during the summer when a higher proportion of leases (new and renewal) are signed.
Even outside of the last year or two, renewals are up in the long term. In the decade before the pandemic (2010-2019), renewals averaged 50.7% nationally. That rate ticked up throughout the decade to stand at 52.8% in early 2020. When COVID-era lockdowns caused many residents to resign their leases by default, retention hit the highest rates on record, topping out around 57% in mid-2022.
This trend is uniform in most major markets. Virtually all the nation’s 50 largest apartment markets have seen renewal rates climb over the last year. In six of those top 50 markets, renewals were up over 300 bps over last October.
Two Midwest markets – Minneapolis and Detroit – claimed the biggest retention increases with rates climbing over 400 bps in the year-ending October. Seattle, San Francisco, Las Vegas and Richmond all saw retention rates climb over 300 bps over the last year.
Generally speaking, renewal rates have climbed the least in high-supply markets and the most in lower-supply markets. The only two major markets in which renewal rates were meaningfully lower in October 2024 compared to a year ago were San Diego (down 80 bps year-over-year) and Austin (down 60 bps).
