Three Effects of Peak Supply on the U.S. Apartment Market

The U.S. hit peak apartment supply volumes in calendar 2024 when a record 588,900 units were delivered. While supply is scheduled to taper off in the near term, deliveries won’t get back to historically normal levels until at least mid-2026 – notwithstanding disruptions or delays in the near term.

With so much new apartment supply hitting the market, the effects have been noticeable. Let’s explore three key impacts on the U.S. apartment market as a result of peak supply volumes.

1. It’s taking longer for properties in lease-up to reach stabilization.

As of the end of 2024, conventional properties going through initial lease-up were taking about 16 months to reach stabilization, which RealPage Market Analytics defines as reaching 85% occupancy or higher. Just a few years ago, in 2019, properties in the initial lease-up phase were taking an average of 12 months to stabilize. That can significantly impact the bottom line for owners and operators. It’s also not a surprising impact, given the sheer volume of competition coming online in recent years.

2. Turnover has decreased as operators have focused on holding onto residents.

One winning strategy operators have seized on is focusing on occupancy preservation for existing residents. In other words, operators are renewing leases – at varied rates – in order to keep residents from moving to a competing property. At the end of 2024, the 12-month moving average renewal rates were at 54.5%. This was well ahead of the long-term average from the decade leading up to the COVID-19 pandemic (2010-2019) and well ahead of U.S. retention rates from the end of 2023 (53%).

3. Concessions are above average.

While concessions are more typical in lease-up properties, operators at stabilized assets have been more likely to offer concessions during the recent supply wave. The share of units offering a concession at the end of 2024 was very close to the all-time highs recorded in the pandemic-era of 2020. Roughly 8.5% of conventional stock in the U.S. offered concessions in December 2024. Just one year ago, only 7.5% of units offered concessions.

The value of concessions has not increased quite as much as the volume of units offering concessions. The average value of concessions is about one month free.