U.S. Multifamily Market Accelerates Recovery: Demand Surges, Supply Slows.

Title: U.S. Multifamily Market Accelerates Recovery: Demand Surges, Supply Slows

Introduction

In a powerful shift within the U.S. multifamily sector, 2025 is shaping up as a pivotal year—characterized by surging demand, a cooling pipeline of new units, and a rapid compression of vacancy rates. CBRE’s latest data, relayed via World Property Journal and backed by their own press releases, reflects a turning point from supply glut to demand-driven momentum.

Demand Skyrockets in Q2 2025

• Record-breaking net absorption: In Q2 2025 alone, 188,200 units were leased—the highest second-quarter total on record.

• This marked a fifth consecutive quarter where leasing demand outpaced new deliveries, compressing the national vacancy rate by 70 basis points to just 4.1%, well below the long-term average of 5%.

• According to Kelli Carhart, CBRE’s Head of Multifamily Capital Markets:
  “This is a dramatic strengthening of fundamentals. Demand is outpacing supply, and we see momentum carrying into 2026.”

Supply Hit the Brakes

• After a record year in 2024 with 450,000 new units delivered, supply has decelerated sharply: only 83,000 new units came online in Q2 2025.

• Earlier in the year, just 70,600 units were added in Q1 2025.

• CBRE anticipates this trend to continue throughout 2025 as fewer projects both complete and break ground—a key driver behind tightening fundamentals.

Rents Begin to Rise

• After nearly two years without significant increases, average monthly asking rent climbed 1.2% year-over-year in Q2 2025, reaching $2,228.

• In Q1 2025, meanwhile, rents rose 0.9% year-over-year to $2,184.

• This marks early signs of rent growth regaining traction, spurred by healthy absorption and slowing deliveries.

Investment and Market Momentum

• Q2 2025 multifamily transaction volume rose 7.1% year-over-year to $32.9 billion, making the sector the largest by share in commercial real estate investment at 34%.

• In Q1 2025, transaction volume soared 33% year-over-year, reaching $28.8 billion, capturing 33% share of total commercial real estate investments.

• This strong inflow of capital underscores renewed confidence among investors in the multifamily segment.

Regional Highlights

• Rent growth by region (Q2 2025):

  • Midwest: +3.7% year-over-year

  • Northeast: +3.1%

  • Pacific: +1.0%

• Leading absorption by metro:

  • New York: 19,300 units

  • Chicago: 9,300 units

  • Dallas: 8,700 units

• In Q1 2025, other cities—Atlanta (7,000 units), New York (8,600), and Phoenix (5,300)—also led positive absorption trends.

Summary Snapshot

Indicator	Q1 2025	Q2 2025
Net Absorption	~100,600 units (highest Q1 since 2000)	188,200 units (Q2 record)
Vacancy Rate	~4.8%	~4.1%
Rent Growth	+0.9% YoY, avg $2,184	+1.2% YoY, avg $2,228
Supply Delivery	70,600 new units	83,000 new units
Investment Volume	$28.8 billion (33% share)	$32.9 billion (34% share)

What This Means for the Market

The Q2 2025 data clearly signals a pivotal transition in the U.S. multifamily market. Demand is not just returning—it’s outpacing supply. Vacancy rates are plunging, rents are on the climb again, and investment activity is surging. CBRE experts like Kelli Carhart expect that momentum to not only persist through 2025, but likely accelerate into 2026, even amid broader economic uncertainty.

This spells a favorable environment for multifamily investors and landlords. On the flip side, renters, particularly in markets with high demand and low affordability, may face upward pressure on costs in the near future.

Final Thoughts

If you're tracking real estate trends, this multifamily shift is significant—it offers insights into broader housing dynamics, especially where renting continues to be more viable than buying for many households. We’ll keep watching how supply pipelines evolve, rent trajectories shift, and whether this recovery sustains into 2026.