National Apartment Vacancy Reaches a New Peak
The U.S. multifamily housing market is witnessing a significant shift as the national vacancy rate climbed to 7.1% in July 2025, marking a record high since tracking began in 2017, according to the latest data from Apartment List. This trend is underscored by a persistent overabundance of new apartment units amid slower tenant demand.
Rents Dip Amid Oversupply and Economic Uncertainty
After a period of steady growth, rental prices have begun to ease, with the median rent standing at $1,402 in July, unchanged from June but down 0.8% compared to July 2024. This represents the third consecutive month of year-over-year rent declines and a notable stall during the historically competitive peak moving season.
The surge in new apartment construction, driven by a boom over the past few years, continues to impact the market. In 2024 alone, more than 600,000 new multifamily units were added—a remarkable 65% increase over 2023 and the highest annual supply since 1986. Yet, absorption has struggled to keep pace, highlighting the persistent imbalance between supply and demand.
Leasing Pace Shows Mixed Signals
Despite these headwinds, the average time to lease an apartment in July was 28 days, slightly longer than June but shorter than earlier in the year when units lingered on the market for as long as 37 days back in January. This suggests some market stabilization, though the environment remains largely favorable to renters.
Regional Rent Dynamics Reflect Divergent Market Conditions
Rents exhibited varied performance across the country. Of the 54 metropolitan areas with populations exceeding one million, 37 saw rent increases from June to July. However, less than half registered positive growth compared to last year.
- Austin, Texas, has emerged as the softest rental market with a steep 6.8% decline in year-over-year rents.
- Denver and Phoenix trail closely, experiencing notable rent contractions.
- Conversely, San Francisco leads in rent growth, boasting a 4.6% increase year-over-year, with strong performances also observed in Fresno, CA, and Chicago.
Economic Factors and Policy Impact on Demand
The Apartment List report also points to broader macroeconomic challenges influencing market dynamics. Ongoing policy uncertainties, including tariffs and regulatory shifts from previous administrations, have dampened renter demand, contributing to higher vacancies and slower rent growth.
"All of our key indicators point to continued softness in the multifamily rental market," the report states. "Although tighter market conditions may eventually return, persistent economic uncertainties and a still sizable recent construction pipeline complicate the outlook."
Looking Ahead: A Market in Flux
While the wave of new supply is beginning to subside, with forecasts indicating a slowdown in apartment construction through the remainder of 2025 and into 2026, the lingering effects of prior overbuilding continue to weigh on the market. This anticipated deceleration may gradually rebalance supply and demand, potentially stabilizing rents over the medium term.
Experts note that renters currently hold leverage in negotiations, but this dynamic could shift as economic variables—such as employment trends and lending rates—evolve.
Editor’s Note
July’s data paints a nuanced picture of the U.S. rental market, revealing both regional disparities and the heavy footprint of recent supply surges. For policymakers and industry stakeholders, the key question remains: How will the interplay of economic uncertainties, shifting demand patterns, and supply moderation shape rental affordability and housing access in the coming years? Close monitoring of these trends will be critical for crafting responsive housing policies and investment strategies.
For renters, the current environment offers an unusual window to negotiate favorable lease terms, especially in markets experiencing sharp rent declines. For landlords and developers, adaptability and cautious forecasting are more important than ever to navigate this evolving landscape.
