Strong apartment demand continued in the second quarter as the pace of new supply continues to slow, according to RealPage.
“Demand for apartments has shown remarkable resilience even as the once-in-a-generation supply wave crests and retreats,” said chief economist Carl Whitaker. “We’re observing healthy absorption rates across the nation. While new supply is decelerating, the total volume of new inventory delivering remains enough to satiate demand.”
In RealPage’s breakdown of the second quarter, occupancy held steady at 95.7%, a modest year-over-year increase, while average effective rents increased at a muted rate of 0.8% year over year. Concessions also remained elevated in most markets, with 20% of units offering a concession with one-month-free promotions.
Rent growth has been the strongest in regions with historically low-supply volumes. Rents have dropped in 13 states year over year, with Arizona and Colorado leading with decreases of over 4%. Both states are in the top five for apartment inventory growth, behind South Dakota, Idaho, and North Carolina.
According to RealPage, these rent drops aren’t due to weak demand but the strong supply meeting housing needs and potentially fueling economic growth by improving affordability.
“Rents are falling in states where new housing supply has been able to satiate—and even surpass—concurrent demand levels,” added Whitaker. “This appears to be a real-time, applied example of how new housing supply ultimately helps create a more affordable market for households throughout those local geographies.”
Over the past 12 months, apartment construction has seen a 37% drop, with 320,000 fewer units under construction compared with the July 2024 tally. RealPage’s forecast predicts an additional 34% decline in deliveries in the next year, with 180,000 fewer units expected to come online. As new supply slows and demand stays strong, occupancy is expected to remain steady through the rest of 2025 and into 2026.
In addition, RealPage projects coastal markets such as San Francisco and New York will tighten further, with vacancy rates dropping under 4% next year. The South, including Atlanta and Dallas, will continue to recover as the high level of supply stabilizes. Exceptions also exist for the supply pipeline of the nation’s largest metros: Nine markets, including Detroit, Los Angeles, Newark-Jersey City, and San Diego are expected to see an increase in deliveries, while seven markets, including Denver, Minneapolis, and San Jose, California, will experience inventory slowdowns of 60% or more.
