Rental vacancy rates

Consumers move away from rental properties as houses become easier to buy, either due to low interest rates or a housing surplus. Both of these conditions were met during the middle of this past decade, and rental vacancy rates rose to historic highs as a result. After staying under 8.0% for most of the 1990s, rental vacancy reached 10.2% by 2004. Interest rates rose between 2005 and 2007 to battle inflation, but the housing bubble persisted, buoyed by the proliferation of sub-prime mortgages. Sub-prime mortgages opened up homeownership to a greater portion of the public, causing the rental vacancy rate to increase.

When the bubble burst and financial markets collapsed in late 2008, tightened lending standards curtailed home purchases, despite historically low interest rates. The difficult economic times forced many people to move in with friends or family members. This factor increased the household size, causing the rental vacancy rate to rise to 10.6% in 2009. Recessions normally drive the rate down as consumers look for affordable housing options. This trend started to occur in 2010, when rental vacancy rates declined to 10.2% and continued over 2012, where the rate fell to 8.7%. The vacancy rate further declined in 2013, due to a slowdown in economic growth over the year, which put off potential home buyers. Slow growth in early 2014, in large part due to harsh weather across much of the country, led to a further decline in 2014. Some geographical areas tend to exhibit higher rental vacancy rates, as regional housing markets sometimes differ considerably from the national market. In particular, the rental vacancy rate is highest in the South and the Midwest. The rental vacancy rate fell to 6.9% in 2016 before rising in 2017.

However, as the economy continued to expand, rental vacancy rates fell, allowing residents to move to new areas, rent larger apartments or move away from home. This trend continued in 2020 and 2021, decreasing 6.7% and 3.2%. This is due to general market correction due to virus outbreaks and other economic factors that introduce uncertainty into the market. As interest rates and renting prices surged in 2022, vacancy rates continued to drop, as many residents elected to renew leases as rent prices surged. In 2023, the vacancy rate rose due to a rise in new apartment construction activity. This led to more options for renters pressured landlords. This continued over to 2024, with 2025 expected to slowdown the rental vacancy rates.