The Resurgence of Apartment Demand: Insights into 2025's Upward Trajectory

Partner with Us to Prepare for Growth!

After weathering years of volatility triggered by the pandemic, the U.S. multifamily housing market is entering a new era of stability and growth. The latest data reveals an astonishing 80% year-over-year increase in national net absorption—a clear signal that apartment demand is not only recovering but accelerating at a pace not seen since the early 2020s.

As we examine this resurgence, it's critical to explore what’s driving this renewed interest in rental living, how different housing segments are responding, and what it means for property owners, developers, investors, and renters moving forward.

A Multi-Year Trend Culminates in a Breakout Year

The recent spike in demand isn’t a fluke. It’s the culmination of a multi-year buildup of deferred household formations, affordability challenges in the single-family housing market, and shifting demographic trends. From delayed life milestones during the pandemic to a growing preference for flexibility among younger workers and retirees alike, a diverse range of renter profiles is reshaping the rental housing landscape.

According to ALN Data, net absorption reached over 140,000 units nationally through April 2025. That’s not only a sharp increase over 2024’s numbers but also the strongest start to any year since 2021. This kind of movement suggests the market is regaining its equilibrium, with residents returning to urban cores and suburban job hubs alike.

Who’s Leading the Comeback? A Look at Class Segments

One of the most striking elements of the resurgence is how broad-based it is across asset classes. For several years, Class A properties—those newer, often amenity-rich developments—dominated absorption due to leasing incentives and pandemic-era migrations. But now, we’re seeing a return to more typical patterns.

• Class D properties (often older, more affordable communities) absorbed more than 23,000 units through April 2025, nearly tripling the total from the same period last year. This indicates that renters are prioritizing affordability as economic pressures linger. 

• Class C properties posted 30,000 units absorbed, their best start to the year since 2021. These communities often cater to working families and long-term renters who are feeling more confident amid stabilizing job markets. 

• Even Class A units, often considered the bellwether for luxury demand, absorbed more than 41,000 units, reflecting renewed interest from high-earning renters who postponed moves during economic uncertainty. 

This balanced demand growth underscores that the resurgence isn’t isolated to one economic tier; it’s systemic.

Supply Side: A Slowdown That Supports Stability

While demand is surging, the supply pipeline is beginning to contract. After a record-setting 450,000 units were delivered in 2024, many developers are hitting pause on new starts due to tighter financing conditions, construction cost inflation, and economic caution. The result? A narrowing supply-demand gap.

At the end of 2024, the U.S. multifamily market had a net oversupply of approximately 120,000 units, down significantly from 270,000 in 2023. If absorption continues on its current path and completions decline as forecasted, we could reach a supply-demand balance—or even shortfall—by late 2025.

This is especially important in markets like Phoenix, Dallas, and Charlotte, which led the country in overbuilding during the post-pandemic development boom but are now seeing that excess inventory get absorbed quickly.

What This Means for Rents, Inflation, and Investment

With demand rebounding and supply moderating, rent growth is beginning to pick up again. After a sluggish 2023, average monthly rents rose 0.5% year-over-year in Q4 2024, reaching $2,176, according to CBRE. This modest growth is expected to accelerate in late 2025 as vacancy rates compress and leasing concessions taper off.

Yet, this growth presents a double-edged sword. As shelter costs are a significant driver of the Consumer Price Index (CPI), an uptick in rents could complicate the Federal Reserve’s ongoing efforts to control inflation. Economists will be closely monitoring how this affects interest rate decisions and broader economic conditions.

Meanwhile, investors are returning to the multifamily market with confidence. Q4 2024 saw $43.4 billion in multifamily transaction volume, a 59% year-over-year increase, highlighting optimism around the sector’s long-term fundamentals.

Looking Ahead: What to Watch for in 2025 and Beyond

As we move through 2025, several factors will determine whether this demand surge sustains:

• Interest Rates: If mortgage rates remain elevated, more potential homeowners will stay in rentals, bolstering demand. 

• Job Growth: Continued strength in employment will support household formation, especially among Millennials and Gen Z. 

• Policy Impacts: Local regulations, rent controls, and zoning decisions will play increasingly significant roles in determining which markets thrive. 

Final Thoughts

The 80% increase in national net absorption isn’t just a number—it’s a signal. It points to renewed confidence in rental housing, changing economic realities, and a demographic tide turning back toward multifamily living. As we navigate this new chapter, agility, insight, and strategic support will be essential in turning market trends into long-term success.

How BGSF Can Help

At BGSF, we support multifamily property owners and operators during times of rapid market movement. Whether you're looking to scale your leasing teams, streamline maintenance, or manage special projects during peak absorption periods, our experienced professionals and workforce solutions are built to flex with your needs.

As the market heats up, the right partner can help you capitalize on growth while maintaining resident satisfaction and operational efficiency. Contact us today!