Q3 2025 Apartment Report by Dr Glen Mueller

🚨 APARTMENT MARKET ALERT: National Cycle Position Shift in Q3 2025

The Third Quarter 2025 Real Estate Market Cycle Monitor reveals a major movement for the Apartment sector nationwide:

The national average for apartments has been moved from the Hypersupply Phase (Phase 3) to the Recovery Phase (Phase 1) of the market cycle. This change represents a significant shift of eight positions (+8) for the national average.

Key Performance and Dynamics (3Q 2025):

• Occupancy: National apartment occupancy was flat in 3Q 2025. Year-over-year, occupancy was down slightly by -0.1%.
• Rent Growth: National average apartment rents grew 0.4% in the quarter and were up 1.6% year-over-year.
• Demand vs. Supply: Although strong supply growth from the past four years has continued, preventing occupancy from rising, positive demand growth was recorded. This demand was supported by 1% year-over-year job growth.
• Absorption: The market saw 114,000 units absorbed during the third quarter.
• Market Leaders: Demand growth was led by markets in the southwest and New York.
• Sub-Sector Pressure: New properties are actively "stealing" tenants from older buildings using lower asking rents, which has led to occupancy declines in existing B and C properties.

Analysts currently believe that a turning point for the sector should happen within the next three quarters.

This analysis is based on the interaction of supply and demand across 59 multifamily markets, with the 12 largest apartment markets representing 50% of the total square footage monitored.

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