Apartment Rent Growth Stabilizes in Sun Belt Markets Amid Insatiable Demand

Apartment investors that have been drawn to booming markets like Austin and Tampa are beginning to see signs of a turnaround as the oversupply of new apartments—and the resulting decline in rents—starts to stabilize. According to a new report by CBRE, urban markets in the Sun Belt experiencing significant renter growth and apartment construction are showing early signs of rebalancing, with occupancy rates and absorption levels starting to level off.

Nearly 70% of the total apartment supply in these rapidly growing areas, and Salt Lake City, has experienced negative rent growth since the third quarter of 2023, CBRE found. However, demand for housing in these areas continues to surpass the rate of new apartment construction, leading to decreased vacancy rates and a potential for positive rent growth.

“Nearly all high-supply markets with negative rent growth are expected to see positive rent growth and stable vacancy rates by mid-2025,” the report stated. “The exception is Austin, where a sharp increase in new suburban supply is likely to sustain negative rent growth until Q3 2025.”

The report analyzed multifamily supply and demand dynamics in Austin, San Antonio, Jacksonville, Atlanta, Charlotte, Raleigh, Tampa, Dallas, Salt Lake City, Fort Worth, Nashville, Denver, Fort Lauderdale, Phoenix, Orlando, and Riverside. It found that the surplus of new apartments in these markets has led landlords to offer the most generous concessions to renters compared to other regions. Despite these concessions, though, strong demand continues to outpace new construction, which supports the potential for rising rents.

While multifamily construction has been curbed by high interest rates and borrowing costs over the past year, the robust demand for apartments is expected to bolster multifamily property values in the short term, CBRE said.

A report in Multi-Housing News from May highlighted that the sale of multifamily properties reached $5 billion in the first quarter, marking the second-lowest transaction amount in the past four years, following only the $4 billion traded in Q2 2020.

While the Sun Belt and Mountain markets face a period of adjustment due to the oversupply of new apartments, the combination of stabilized new construction and sustained demand suggests a promising outlook for apartment investors, CBRE said.