The average advertised rent price decreased 0.3% in the third quarter and 0.1% year over, according to RealPage’s latest analysis. As part of its third-quarter takeaways and fourth-quarter outlook, the report also highlights how soaring home values and higher mortgage payments above the nation’s average rent are keeping more households in the rental market.
“Resident retention has increased and is approaching an all-time high as the current cost of renting is significantly less expensive than homeownership,” said chief economist Carl Whitaker. “With residents staying put longer, owners and operators have an opportunity to create an even higher-quality resident experience and build a stronger sense of community at their properties.”
In the third quarter, occupancy inched down to 95.4% quarter over quarter.
The South has added a quarter of a million units in the past 12 months—twice as much as the second fastest-growing West region. Rents are down 1.7% in the past year in the South, while the West saw rents decrease 0.4%. However, the Midwest and Northeast, with lower new supply, continue to see rents grow 2.3% and 1.9%, respectively.
The laggards for growth are Denver and Austin, Texas, where rents are down nearly 8%. San Francisco tops the list with 7.1% rent growth in the past month, far ahead of second-ranking Chicago at 4.5%.
“According to RealPage data, the outlook for the U.S. apartment market in the next 12 months is that supply will cool considerably from its current level,” said Whitaker.
In the third quarter, supply began to cool with 105,000 units delivered—this is the fewest since the second quarter of 2023 and a 35% drop from the third quarter of 2024.
In the next year, only 324,000 are expected to be completed, marking the fewest in a given 12-month window since the second quarter of 2020. In addition, 519,000 market-rate units are under construction nationally, the fewest number in over a decade.
According to RealPage, the continued increase in resident retention combined with new lease shopping points to demand remaining healthy.
“Current trends do not mirror past economic cycles, whereby both retention and new lease activity contracted significantly,” noted the analysis. “In fact, should strong resident retention persist, the multifamily industry could see an optimistic client base and improved market momentum heading into next year.”