Rental vacancy rates

The rental vacancy rate is estimated to be 6.7% in 2025, reflecting a slight stabilization following fluctuations in recent years. The rate's stabilization indicates that the market is adjusting after a period of volatility driven by rising construction activity and broader economic uncertainty. Rental vacancy rates rose in 2023 and 2024 due to a surge in the supply of new apartments, which increased options for renters and placed pressure on landlords. However, by 2025, the pace of this increase is expected to slow as the market absorbs new inventory and tenant movements moderate.

Between 2020 and 2025, rental vacancy rates experienced notable shifts driven by both macroeconomic and housing market trends. In 2021, the vacancy rate declined to 6.1% as market corrections occurred due to virus outbreaks and related economic uncertainty, prompting many renters to renew leases and creating downward pressure on vacancies. This trend continued into 2022, when vacancy rates further declined to 5.8% amid surging interest rates and rising rental prices, encouraging retention among existing tenants. The rate rose to 6.5% in 2023 as heightened construction activity led to an increase in available rental units, giving renters more choices and compelling landlords to respond to the uptick in supply. The rental vacancy rate continued to rise slightly in 2024, reaching 6.8%, as the effects of increased supply persisted. Regional variations have persisted, with the South and Midwest exhibiting higher vacancy rates than the national average, influenced by differences in local economic conditions and housing supply.

Over the five years to 2025, the rental vacancy rate has increased by 0.4 percentage points, largely reflecting the interplay between apartment construction activity, changes in interest rates, and shifting renter preferences. Increased construction led to cyclical increases in vacancies, while interest rate movements and rental price surges affected renters' decisions to move or stay. Broader macroeconomic factors, including the lingering impacts of pandemic-related uncertainty and inflationary pressures, have influenced market behavior, contributing to both supply-side and demand-side fluctuations. Additionally, the importance of geographic discrepancies has grown, with metropolitan areas generally seeing lower vacancy rates relative to less urban regions. Overall, the period has been characterized by a dynamic adjustment between supply and demand, resulting in the observed changes in rental vacancy rates.