It’s a mix of good and bad news for the apartment market, according to a new report from Apartment List. Starting with the positive note, U.S. rents rose in February after slipping for six consecutive months. The bad news: the 0.2% increase was not enough to turn annual rent growth positive.
Instead, median rents nationally are down 1.5% from their year-ago level and 5.9% ($85 per month) from their 2022 peak.
“This month’s -1.5% reading is the lowest year-over-year rent growth recorded since the summer of 2020, when the market was rocked by the early months of the pandemic,” the report stated. Rent slipped $20 to $1,357 year-over-year. Still, current rent levels remain 18% higher than they were in January 2021.
And there may be reason to hope. Over the past four years, February has marked the start of a trend when rents begin to climb in preparation for the summer moving season, suggesting that rents may continue their upward movement in the months ahead. The trend also marks a shift in seasonality patterns, the report said. March has become the new May as the period with the highest rent growth.
February rents rose month-over-month in 49 of the 54 metros with populations exceeding one million people, but year-over-year rents were down in 34 of them. Annual declines were concentrated in the South and Mountain West, while increases were more common in the Northeast, Midwest and parts of the West Coast.
Austin hit bottom the hardest among large metros, with median rent plunging 5.9% in the past year and 20% from its 2022 peak. The city is expanding supply by permitting new homes at the fastest pace. Other metros rapidly issuing permits in spite of steep rent declines are San Antonio, Denver, Phoenix, Tampa and Charlotte.
Virginia Beach, in contrast, saw the nation’s fastest rent growth, up 5.3% over the past year. It was followed by San Francisco and San Jose. Growth has also been steady in Midwest markets like Chicago, St. Louis and Minnesota.
Once again, too many new apartments coming online complicates the picture, although the trend is tapering. In 2024, over 600,000 new multifamily units were delivered. The pace slowed to under 500,000 in 2025 and fewer are expected this year, though still more than the long-run average.
Apartment List’s vacancy index, which measures the average vacancy rate of stabilized properties in its marketplace, rose to 7.4% in February – the highest level since 2017, when it started tracking occupancy. As a result, conditions remain soft.
“The runway for these sluggish conditions seems to have lengthened as a shaky labor market has put a damper on housing demand,” the report commented.
It noted that list-to-lease time – the time it takes to lease a unit – has been significantly elevated. In January, it took 41 days and the 40 days required in February were the longest delay in any February since 2019 and twice as long as in 2021, when the market was at its peak.
“Whether or not market conditions shift will now depend on rental demand, whose outlook has grown shakier due to weakness in the labor market and general economic uncertainty,” the report concluded.
Source: “Rents Tick Up, But Apartment Market Remains Soft After Yearlong Slump”
