While apartment occupancy across the U.S. held steady in May, momentum in rental-rate growth lost steam, according to new data from RealPage.
Among the 50 largest metro areas, occupancy remained unchanged from April at 95.7%, marking a 90-basis-point increase since the beginning of the year. However, roughly 40% of these markets saw a slight monthly decline. Regional performance varied, with modest occupancy gains in the Midwest and Northeast, stability in the West, and a slight dip in the South.
On the pricing side, effective rent growth slowed significantly, landing at just 0.26% for May—down from 0.51% a year earlier. Annual rent growth also declined from 1% in April to 0.7% in May. Despite that, demand remains strong: In Q1 2025, demand outpaced supply by over 130,000 units.
Regional Rent Trends: Winners and Losers
Southern cities that boomed during the pandemic are now facing some of the steepest rent declines. Austin’s rents dropped nearly 1% in May and 8% over the past year. Similar annual declines were reported in Denver (5.4%), Phoenix (4.9%), San Antonio (3.7%), and Jacksonville (2.8%).
Cities like Phoenix, Tampa, Houston, Memphis, and Sacramento saw monthly rent cuts ranging from 0.4% to 0.6%.
Conversely, tech-heavy San Francisco recorded the highest rent growth among major markets at 6.2% annually, driven by return-to-office policies and limited housing supply. Chicago followed with a 5.5% rise, along with notable increases in New York (4.1%), Cincinnati and San Jose (3.9% each), and Kansas City (3.8%).
Affordable Housing Under Pressure
As rents climb in some metros, affordable housing continues to be a pressing issue. In many areas, fewer than half of job listings offer a livable wage, putting further strain on housing access. Cities like Detroit, Minneapolis, Buffalo, and Milwaukee have ramped up office-to-residential conversions, creating new units, while others are experimenting with rent control policies.
On the policy front, the federal budget proposed by the Trump administration includes significant changes to housing assistance programs. While it restores a 12.5% boost to Low-Income Housing Tax Credit allocations for 2026–2029—a move welcomed by affordable housing developers—it also proposes cutting $26.7 billion from HUD rental assistance programs, including Section 8 and public housing.
Source: SFBJ