While apartment occupancy across the U.S. held firm in May, rental-rate increases — which had been trending upward after months of stagnation — slowed.
That’s according to a recent report from apartment-analytics company RealPage, which found occupancy among the nation’s 50 largest metro areas in May stayed steady month-to-month, at 95.7%, but is up 90 basis points year-to-date. And while all of those markets posted annual growth in occupancy, 40% were down on a monthly basis.
Occupancy was up slightly in the Midwest (10 basis points) and the Northeast (20 basis points), while the West was unchanged. The South saw a decline of 10 basis points.
RealPage also reported monthly effective rent growth clocked in at 0.26% last month, about half of what was seen in May 2024 (0.51%). Annual effective rent growth softened from 1% in April to 0.7% in May.
Demand continues to far outpace occupancy, according to RealPage. In the first quarter of 2025, 576,720 units were available while demand was 707,871 units. The annual inventory change for May was 2.9%.
Occupancy was strongest in the Northeast, at 97.1%, followed by the Midwest (96.5%), the West (95.8%) and the South (94.8%).
Rent cuts across the South
Southern pandemic-era hot spots saw some of the sharpest rate cuts at the year-ending May 2025.
Austin, Texas’ rents declined 0.9% in May, at an 8% cut on an annual basis. Annual effective rent drops were also significant in Denver (with a decline of 5.4%), Phoenix (4.9%), San Antonio (3.7%) and Jacksonville, Florida (2.8%).
On a monthly basis, Phoenix; Tampa, Florida; Houston; Memphis, Tennessee; and Sacramento, California, all saw cuts between 0.4% and 0.6%.
Meanwhile, San Francisco experienced some of the highest rent hikes among major apartment markets, with an annual effective growth rate of 6.2%. Tech companies continue to call workers back to the office, and faced with a limited housing supply, some returning employees in the Bay Area are forced to pay a premium to live close to their workplace. A volatile stock market and high mortgage rates may also be keeping many would-be home buyers in San Francisco firmly on the sidelines.
Chicago — which had been the nation’s rent-growth leader for about a year — saw its rents increase by 5.5%. Other markets that topped the leaderboard were New York (4.1%); Cincinnati (3.9%); San Jose, California (3.9%); and Kansas City (3.8%).
Outlook mixed for affordable housing
While rent growth may be a boon for landlords, a lack of affordable housing could lead to workforce-development issues in the wider community. In some metros, less than half of the available job postings offer the local livable wage, and high housing costs are a chief contributor to an area’s cost-of-living challenges.
Housing affordability continues to be a struggle for cities, with a lack of inventory frequently being cited as a hurdle. Midwestern cities like Detroit; Minneapolis; Buffalo, New York and Milwaukee are leading the way in office-to-residential conversions, which has added new units at a steady clip. Some metro areas, including the Twin Cities, have also tested limits on rent hikes, to varied success.
However, President Donald Trump administration’s current budget bill could upend some housing efforts.
The current federal budget bill includes several proposed changes to the Low-Income Housing Tax Credit (LIHTC), including restoring the 12.5% increase for 9% LIHTC allocations that expired in 2021 for allocations between 2026 and 2029 — changes that are largely supported by afforable-housing developers.
But while some of the proposed changes could loosen funding constraints for developers, other cuts could squeeze landlords. Among the proposed cuts to the U.S. Department of Housing and Urban Development is the elimination of an estimated $26.7 billion in rental-assistance programs, including Section 8 housing vouchers, as well as public housing and housing assistance for the elderly and disabled.
Source: “Apartment Occupancy Holds Steady But One Metric Slow Across Major US Markets“
