Yardi Matrix’s May 2025 National Multifamily Report noted that rent growth achieved a “steady if unspectacular growth pattern in May,” at a 1% year-over-year increase. Meanwhile, occupancy clocked in at 94.4%, which represented a 0.3% fall, representing the “lowest level over a decade,” the report explained.
The reason? Ongoing supply deliveries. However, “while there has been an influx of new apartment completions, particularly in 2024, the demand for rental housing is also rising,” Doug Ressler, Yardi Matrix’s Manager, Business Intelligence, told Connect CRE. “The increased demand is helping to stabilize and push rent growth back into positive territory.”
It’s About the Region
As with any commercial real estate asset, the numbers tend to vary geographically. The report pointed out that gateway and secondary metros in the Northeast and Midwest had the highest rent growth. Limited new development and higher demand,” Ressler said. He added that areas struggling with oversupply—think the Sunbelt states—continue experiencing negative rent growth.
Ressler also said that cities in these regions offer stable and diverse economies and more affordable living options.
Furthermore, markets that boast large research universities, especially in the areas of biotech, are experiencing what Ressler dubbed “above-average downside risk,” even as the report noted that risks remain due to thin cap-rate spreads and a Treasury rate hovering at 4.5%. Because of this, “Boston, San Francisco, Raleigh-Durham, Seattle and San Diego are among the MSAs we will monitor closely over the next 12-18 months,” he said.
What’s Next?
In terms of the sector outlook, Ressler said that Yardi Matrix’s forecast is for a 1.6% national rent growth in 2025 and 1.2% in 2026 “before trending toward a long-run steady-range rate of 3% to 4%.” Meanwhile, the occupancy outlooks stand at 94.6% (2025), 94.7% (2026) and 94.6% (2027).
The report pointed out that the presidential administration’s economic policy impacts won’t show up immediately, but the forecast calls for guarded optimism. Ressler went further, noting that the multifamily sector is in a summer leasing season rife with a mix of economic signals. While payrolls, consumer spending and household balance sheets are generally healthy, consumer sentiment and ISM new orders suggest a moderation of forward momentum.
Ressler acknowledged that local economic downturns with job losses or company closures reduce rental housing demand, impacting rent growth and occupancy rates. “Overall, the balance of risk has modestly tilted toward slower growth,” he added. “But a recession is not our base case.”
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