According to new research from CBRE, the U.S. multifamily housing market is showing strong signs of recovery as robust demand outpaces new supply, driving vacancy rates lower and fueling investor confidence.
In the first quarter of 2025, the sector posted a net absorption of 100,600 units–the highest Q1 performance since 2000 and more than three times the pre-pandemic average. This marks the fourth straight quarter in which tenant demand has exceeded the number of new units completed.
As a result, the national multifamily vacancy rate fell by 20 basis points to 4.8%, dipping below its long-term average of 5.0%.
The surge in demand comes amid a slowdown in new construction. Following a record-setting 450,000 new units delivered in 2024, only 70,600 were brought online in Q1 2025. CBRE expects this deceleration in completions to persist throughout the year.
Average monthly rents increased 0.9% year-over-year to $2,184, with rent growth expected to strengthen further due to reduced supply and continued healthy absorption.
Investment activity also surged, with multifamily transaction volume reaching $28.8 billion in Q1 2025–a 33% year-over-year increase. The multifamily sector captured the largest share of commercial real estate investment activity for the quarter at 33%.
“Multifamily fundamentals continue to strengthen due to strong renter demand and a diminishing construction pipeline,” said Kelli Carhart, Head of Multifamily Capital Markets at CBRE. “We expect the gains to continue this year and accelerate in 2026. While broader economic uncertainty may impact consumer sentiment and capital markets, multifamily remains one of the most resilient asset classes.”
As the sector transitions from a period of heavy supply to one of more moderate growth, analysts expect continued momentum for multifamily performance through 2025 and into 2026.
Additional Q1 2025 Highlights:
The Midwest (3.3%), Northeast (2.7%), and Pacific (0.9%) regions led the nation in annual rent growth.
New York (8,600 units), Atlanta (7,000), and Phoenix (5,300) posted the highest net absorption totals.
63 out of 69 tracked markets recorded positive net absorption.
49 markets saw demand exceed new supply, down from 64 in Q4 2024.
47 markets experienced a quarter-over-quarter decline in vacancy, compared to 63 in the previous quarter.
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