The year 2024 ended on a down note for rents, but 2025 promises change as the supply growth declines, Yardi Matrix says in its yearend report.
The report says the rental market has been stuck on a treadmill because:
“Metro-level performance has been mixed—high-supply growth metros have seen advertised rents turn negative, while metros with low supply have recorded moderate growth—but national year-over-year growth has been stuck between 0% and 1.0% for 16 straight months,” the report says.
Why 2025 promises change
Change is coming in 2025 for several reasons.
- Starts have dropped
- Completions will wane soon
- Job growth will help absorb completed new apartments
- Demographics will also help
But there are concerns in 2025 as well
Donald Trump’s plan to reduce immigration could slow demand.
“Multifamily also is bracing for less favorable interest rate conditions than expected,” the report says. The Fed forecast has indicated there may not be the expected rate cuts in 2025. The threat of tariffs also looms.
“The upshot is that investors’ higher inflation expectations have pushed the 10-year Treasury rate up to 4.6%, creating ongoing pricing uncertainty that could keep deal flow muted,” the report says.
Highlights of the report:
- Multifamily finished 2024 on the downswing, with the average U.S. advertised rent falling $4 nationally in December to $1,742. Year-over-year rent growth, which remains positive albeit weak, was down 10 basis points to 0.6%.
- The trends that shaped 2024 remained in place to the end. Demand stayed robust throughout the year in most regions, so regional and market-level rent change was determined by the amount of local supply growth.
- After outperforming multifamily through most of the year, single-family rental rates also ended the year poorly. Advertised rents dropped $7 month-over-month in December to $2,141, with year-over-year growth dropping 40 basis points to -0.8%.
Read the full Yardi Matrix report here.
About Yardi Matrix
Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.