For the data behind the commentary, download the full Q4 2024 U.S. Multifamily Report.
Breakneck Absorption Kept Vacancies From Hitting Double Digits in 2024
Last year marked the second-strongest year for multifamily absorption since the turn of the century, coming in just 20% below 2021’s record-breaking figure. Strong demand kept vacancies in single digits despite more than 530,000 new deliveries—a 16% year-over-year (YOY) increase. If demand had only matched the 2017-2019 average (278,000 units), vacancies would have reached 10.1%—160 bps higher than the current level. Fortunately for landlords, households felt increasingly confident in their financial situations driving an increase in renter household formation. The stabilized vacancy rate, which excludes properties in lease-up, rose modestly by 20 bps to 6.7% in 2024, suggesting that most of the market’s overall vacancy increase stemmed from the influx of new development.
The southern U.S. was the biggest beneficiary of the demand wave, accounting for more than half of the 430,000 units absorbed nationwide, with 226,000 net move-ins. Dallas/Ft. Worth led all markets with nearly 30,000 units absorbed, followed by New York (25,000), Austin (22,000) and Atlanta (21,000). These four markets also topped the nation in new deliveries in 2024, with Dallas (41,000 units), Austin (32,000), New York (28,000) and Atlanta (25,000).
Rent Growth Remains Resilient Despite New Deliveries
Rent growth has remained limited, fluctuating between 1.5% and 2.0% since the second quarter of 2023. Competition for renters remains fierce: Among the more than 180,000 units Cushman & Wakefield manages across the country, we’ve seen increasing use of concessions in stabilized properties near new deliveries. Although rent growth has improved slightly from last year’s low, it remains about half the 2010-2019 average growth rate of 3.7%.
Regionally, rent growth remains muted in the South and West, at 1.0% and 1.4%, respectively. Markets like Austin, Denver and Phoenix are still experiencing rent declines as they continue to work through the supply wave. On the other hand, markets in the Northeast and Midwest averaged rent growth of 2.9% and 3.8%, respectively. Milwaukee, Cleveland and Stamford are leading major markets in rent growth, with YOY increases of 4.8%, 4.7% and 4.4%, respectively.
The Supply Peak Has Passed
After the delivery of 530,000 units last year, the construction wave is firmly past its peak. Nationally, 560,000 units remain under construction, the lowest level since 2018. Developers are pulling back significantly, with just 230,000 units breaking ground in 2024—on par with 2012 levels and over 30% below the pre-pandemic (2017-2019) average of 330,000. Most forecasters project 2025 deliveries will be roughly half the rate of 2024, potentially leading to a swift recovery in fundamentals.
The supply picture is most improved across Texas. Austin (-25,000 YOY), Dallas/Ft. Worth (-23,000) and Houston (-17,500) recorded the fastest pipeline declines nationally, while San Antonio (-11,000) ranked eighth.
For the data behind the commentary, download the full Q4 2024 U.S. Multifamily Report.
