Apartment rents are falling even further, with vacancies at a record high

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There is still a significant amount of new supply making its way through the multifamily housing market. This, combined with weak demand, especially from the youngest workers, is pushing vacancies up and rents down.

The national average rent for apartments fell 1% in November compared to October, and now stands at $1,367, according to Apartment List. This was the fourth consecutive decline on a monthly basis. Apartment rents were down 1.1% from November 2024 and down 5.2% from their peak in 2022.

“Earlier this year, it appeared that annual growth was on track to turn positive for the first time since mid-2023; however, this recovery stalled and reversed course during a particularly slow summer,” according to Apartment List researchers.

After hitting a record high for this indicator, dating back to 2017, in October, the national multifamily vacancy rate remained at 7.2% in November.

The historic boom in multifamily construction over the past few years is now winding down, but a healthy supply of new units is still coming online at a time of much weaker demand.

The decline has historically seen the biggest slowdown in multifamily rentals, but this year it has become more pronounced. CoStar reported the largest monthly decline in average rent it has seen in 15 years of tracking. The main reason is that more young people are struggling to start new families.

“That group of 18- to 34-year-olds… I think up to 32.5% of those are now living with their families, and that’s the highest level in a while,” said Grant Montgomery, national director of multifamily analytics at CoStar. “I think this reflects the higher rental costs that have risen over the years, as well as the tougher job market for young people just out of college.”

“This is where a lot of the demand has traditionally come from, and the primary demand for renters is coming from that kind of younger base,” he said.

Weakness is evident in the stocks of major public real estate investment trusts. Names like Avalon Bay, Residential stocks and Camden Estate Trust All down year so far.

Some markets are seeing rents decline faster than others, due to local economic factors. For example, Las Vegas is seeing a slowdown in tourism, which in turn is affecting jobs there. Boston has seen a decline in federal funding for biotechnology as well as a decline in the number of foreign students at its colleges and universities. Both are impacting the rental sector severely. Austin, Texas, is seeing the biggest hit in rents, thanks to more construction of multifamily units.

As rents decline nationally and landlords ramp up concessions, renters are increasingly looking to more affordable markets.

Cincinnati was the most searched market, followed by Atlanta and Kansas City, Missouri, according to a Yardi report that looked at where apartment hunters were active last summer, traditionally the busiest time for new rentals. St. Louis saw the largest quarterly jump in renter interest, and Washington, D.C., fell from first to fourth place.

“The Midwest, in particular, has attracted more attention than ever before, suggesting that many ‘hidden gem’ markets are no longer a secret,” according to the report, which found that 11 of the top 30 cities in terms of rental demand are in the Midwest.

Yardi also revised its supply forecast for 2026, saying that while new supply will decline through 2027, a larger-than-expected pipeline under construction caused its previous quarterly estimates for 2025 and 2026 to increase by 6.8% and 2.5%, respectively.

As construction continues to slow next year, the overall market should stabilize somewhat, according to the Apartment List report.

“However, the supply boom still has little runway to go, and the demand outlook is starting to look weaker amid a fragile labor market,” the researchers wrote.