After a so-so year in 2024, multifamily starts 2025 “walking a tightrope, with heavy supply growth balanced by equally strong demand,” Yardi Matrix writes in the December report.
Overall, the market has been on a “treadmill” during 2024 with national year-over-year growth stuck between 0% and 1.0% for 16 straight months, the report says.
“Clearly, 2025 promises change. Starts have dropped, and completions will wane soon. On the demand side, absorption will be boosted by healthy job growth and demographics.”
Still, the report notes that immigration represents a source of demand for multifamily, and that remains uncertain with the new administration.
“The U.S. Census Bureau recently increased its estimate of international immigration to 2.8 million in 2024, 84% of total U.S. population growth, while upping immigration estimates to 4 million combined in 2022 and 2023,” the report says.
On top of that, interest rates now appear to hold “less favorable” conditions than what had been expected.
“The upshot is that investors’ higher inflation expectations have pushed the 10-year Treasury rate up to 4.6%, creating ongoing pricing uncertainty that could keep deal flow muted,” Yardi Matrix says.
Highlights of the report
- Multifamily finished 2024 on the downswing, with the average U.S. advertised rent falling $4 nationally in December to $1,742. Year-over-year rent growth, which remains positive albeit weak, was down 10 basis points to 0.6%.
- The trends that shaped 2024 remained in place to the end. Demand stayed robust throughout the year in most regions, so regional and market-level rent change was determined by the amount of local supply growth.
- S. advertised rents fell 0.2% month-over-month in December, with declines in 20 of the top 30 metros.
- High-supply markets continue to record some of the largest declines. In December in Austin, advertised rents fell 1.1% month-over-month.
- After outperforming multifamily through most of the year, single-family rental rates also ended the year poorly. Single-family rental advertised rents dropped $7 month-over-month in December to $2,141, with year-over-year growth dropping 40 basis points to -0.8%.
About Yardi Matrix
Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.