RealPage, a leading global provider of AI-driven software platforms for the real estate industry, announced its second-quarter 2025 analysis of the multifamily housing sector, revealing a continued deceleration in new apartment supply amidst resilient demand.
The analysis highlights a notable slowdown in new apartment construction activity. Carl Whitaker, chief economist at RealPage, commented on the market dynamics, stating, “Demand for apartments has shown remarkable resilience even as the once-in-a-generation supply wave crests and retreats.” He added, “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.”
Key takeaways from the second quarter include a steady occupancy rate of 95.7%, representing a modest year-over-year increase. Average effective rents saw a muted growth of 0.8% year-over-year in Q2. Markets with lower supply volumes, particularly in the Midwest, exhibited slightly stronger rent growth. Concessions remain elevated across most markets, with 20% of units currently offering promotions such as one-month free. This trend underscores a growing disparity between limited vacancy coastal markets and supply-laden Sun Belt areas. Rents have declined in 13 states over the past year, with Arizona and Colorado experiencing drops exceeding 4%. Both states rank among the top five for apartment inventory growth, trailing only South Dakota, Idaho, and North Carolina. The declines in these states are attributed to strong supply meeting housing needs, potentially improving affordability and fueling economic growth, as evidenced by an average job growth of 0.7% year-over-year in these areas. Whitaker further explained, “Rents are falling in states where new housing supply has been able to satiate – and even surpass – concurrent demand levels. 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.”
Looking ahead to the third quarter, regional differences are becoming more pronounced. Coastal markets like San Francisco and New York are projected to tighten further, with vacancy rates expected to drop below 4% by 2026. In contrast, the South region, including Dallas and Atlanta, is anticipated to continue its recovery as excess supply stabilizes. Among the nation’s largest metros, nine markets—including Los Angeles, Detroit, San Diego, and Newark-Jersey City—are expected to experience an increase in deliveries, while seven others, led by San Jose, Minneapolis, and Denver, will see delivery slowdowns of 60% or more. Over the past 12 months, U.S. apartment construction has decreased by 37%, resulting in 320,000 fewer units under construction compared to the July 2024 tally. The forecast anticipates an additional 34% decrease in housing deliveries over the next 12 months, equating to 180,000 fewer units entering the market. Occupancy is projected to remain steady through the remainder of 2025 and into 2026, supported by robust demand and diminishing new supply.
RealPage, Inc., founded in 1998 and headquartered in Richardson, Texas, specializes in AI-enabled software platforms for the real estate industry. The company, which joined Thoma Bravo’s portfolio in 2021, offers Lumina AI™ Workforce, an agentic AI platform designed for various property operations including leasing, facilities, and finance. RealPage serves over 24 million rental units from offices in North America, Europe, and Asia.
