Apartment rent growth is expected to increase over the coming year, but at a market level, performance is likely to vary, according to a RealPage forecast.
Markets that are poised to outpace the national rent growth average in 2025 include those with minimal or modest supply pressure coupled with stable demand. This category of slow-and-steady markets is largely concentrated in the Midwest and Northeast/Mid-Atlantic regions and includes Chicago, Cincinnati, Indianapolis, Kansas City, Pittsburgh, Richmond and Virginia Beach, said the report. Markets within this tranche will likely see rent growth near historically normal levels of between 3% and 4%.
Also expected to outpace national rent growth are gateway and gateway-adjacent markets with solid occupancy. These markets include Boston, the Inland Empire, Newark, Orange County, San Francisco/San Jose, Seattle and Washington, D.C. Supply and demand trends will keep several markets on par with average national rent growth, said the report.
Meanwhile, markets with little supply but demand headwinds are likely to experience slightly lower rent growth of between 2% and 3%. These markets include Baltimore, Cleveland, Greensboro-Winston Salem, Memphis, Milwaukee, Philadelphia, Sacramento and St. Louis.
Similarly, some Sun Belt markets have reached or passed peak supply levels and are likely to post rent growth of between 1.5% and 2.5%, said RealPage. Examples include Dallas, Houston, Las Vegas, Orlando, Salt Lake City, South Florida and Tampa. Other Sun Belt markets – including Austin, Charlotte, Phoenix, Raleigh/Durham and San Antonio – are experiencing supply pressure coupled with strong persistent demand that could make it difficult to grow rents at all.
“Though strong demand persists throughout many of these markets, 2025 may be unique in the sense that the Sun Belt begins to see some inner-regional bifurcation,” said the report. “That is, markets past their supply peak versus those areas where supply pressure will linger for longer. Markets where supply pressure lingers for the longest (whether due to the timing of supply or the sheer volume of deliveries) are expected to see a subsequently slower recovery period.”
Weaker-than-expected demand will challenge fundamentals in markets like Atlanta, Los Angeles, Minneapolis, Oakland, Portland and San Diego. Although rebounding economic growth for West Coast markets has boosted recent sentiment, underlying demand softness has resulted in lagging performance despite manageable inventory growth. Rent growth expectations in these markets range from 0% to 2%, said RealPage.