Print this page

New Apartments Are Filling Up at Nearly the Slowest Pace on Record, But That May Change as Builders Pull Back

Written by Posted On Sunday, 09 March 2025 07:06

New Apartments Are Filling Up at Nearly the Slowest Pace on Record, But That May Change as Builders Pull Back

Less than half (47%) of newly built apartments completed in the third quarter of 2024 were rented within three months, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s tied with the fourth quarter of 2023 for the lowest share on record aside from the start of the pandemic.

This is according to a Redfin analysis of the U.S. Census Bureau’s seasonally adjusted absorption rate data for unfurnished, unsubsidized, privately financed rental apartments in buildings with five or more units, dating back to 2012. The most recent data available covers apartments completed in the third quarter of 2024, and either rented or not rented within three months of then.

Apartments are filling up slowly because renters have a lot of options to choose from; there were 142,900 new apartments completed in the third quarter—the highest number on record.

“Some landlords are slashing prices and offering concessions like free parking to woo tenants, but renters should know that these perks could start to dry up,” said Redfin Senior Economist Sheharyar Bokhari. “Builders are slowing their roll, with permits to construct apartments down almost 10% year over year. This means renters will eventually have fewer apartments to choose from, which could embolden landlords to boost rents—though that may not happen until well into next year because a lot of apartments built during the pandemic are still coming on the market.”

During the pandemic moving frenzy, apartments were filling up at record speed due to soaring demand, which drove up rents. To help meet that demand, builders ramped up construction, which led to more vacancies and lower rents. The rental vacancy rate for buildings with five or more units ended 2024 at 8.2%—the highest level since the start of 2021. The median U.S. asking rent is now $1,607, up 0.4% year over year but roughly $100 below its record high. While rents are no longer falling like they were in 2023, the small increases they’re posting are a far cry from the double-digit growth seen during the pandemic.

Studio apartments are filling up faster than last year

The absorption rate for apartments completed in the third quarter was roughly the same across bedroom types: around 50%. With the exception of studio apartments, all bedroom types were absorbed at a slower pace than a year earlier.

Half (50%) of studio apartments completed during the third quarter were rented within three months, up from 42% a year earlier. Meanwhile, the absorption fell to 49% from 54% for 1-bedroom apartments, fell to 50% from 51% for 2-bedroom apartments, and fell to 51% from 56% for 3+-bedroom apartments. The market for studio apartments may be holding up relatively well because there aren’t as many available; completions of all other bedroom types posted double-digit increases in the third quarter, while completions of studios only rose 0.4%.

 

Apartments

completed

in Q3 2024

YoY

change in

apartments

completed

Absorption

rate for

apartments

completed

in Q3 2024

YoY change

in

absorption

rate

Median

asking rent

of new

apartments

(Q4 2024)

YoY change

in median

asking rent

for new

apartments

Studio

7,739

0.4%

50%

8 ppts

$1,601

-0.3%

1 bedroom

69,440

78.8%

49%

-5 ppts

$1,619

-0.5%

2 bedrooms

57,770

85.6%

50%

-1 ppt

$2,005

1.9%

3+ bedrooms

8,666

20.9%

51%

-5 ppts

$2,362

-5.1%

Please note that absorption rate data by bedroom type is not seasonally adjusted.

To view the full report, including charts, please visit:
https://www.redfin.com/news/apartments-rented-near-slowest-rate-on-record

Rate this item
(0 votes)
Redfin

Redfin is a technology-driven real estate company with the country's most-visited real estate brokerage website. As part of Rocket Companies (NYSE: RKT), Redfin is creating an integrated homeownership platform from search to close to make the dream of homeownership more affordable and accessible for everyone. Redfin’s clients can see homes first with on-demand tours, easily apply for a home loan with Rocket Mortgage, and save thousands in fees while working with a top local agent. You can find more information about Redfin and get the latest housing market data and research at Redfin.com/news. For more information about Rocket Companies, visit RocketCompanies.com.

https://www.redfin.com

Latest from Redfin

Joomla! Debug Console

Session

Profile Information

Memory Usage

Database Queries