U.S. Multifamily Recovery Continues as Vacancy Rate Falls, New Construction Slows

The U.S. multifamily market continues to rebound, driven by robust absorption and a declining national vacancy rate, according to CBRE’s latest research.

Positive net absorption, which measures the change in the number of occupied units, totaled 100,600 units in Q1 2025, the strongest first-quarter performance since 2000 and more than triple the pre-pandemic Q1 average. This marks the fourth consecutive quarter in which demand surpassed new construction completions. As a result, the overall multifamily vacancy rate fell by 20 basis points to 4.8%, below its long-term average of 5.0%.

After a record 450,000 new units in 2024, only 70,600 units were delivered in Q1 2025, a slowdown that is expected to continue in coming quarters.

Average monthly rent increased 0.9% year-over-year in Q1 2025 to $2,184. Rent growth is likely to further improve amid slowing construction completions and healthy absorption.

Multifamily investment volume increased by 33% year-over-year in Q1 2025 to $28.8 billion. The multifamily sector accounted for the largest share of total commercial real estate investment volume in Q1 2025 (33%).

“Multifamily fundamentals continue to strengthen due to strong renter demand and a diminishing construction pipeline. We expect the gains to continue this year and accelerate in 2026,” said Kelli Carhart, Head of Multifamily Capital Markets for CBRE. “Economic uncertainty will continue to impact consumer sentiment and cause capital markets volatility, but the multifamily sector is poised to remain resilient.”

Other Q1 2025 Multifamily Sector Highlights:

• The Midwest (3.3%), Northeast (2.7%) and Pacific (0.9%) regions experienced solid year-over-year rent growth.
• Sixty-three of the 69 markets tracked by CBRE recorded positive net absorption in Q1 2025, with New York (8,600 units), Atlanta (7,000) and Phoenix (5,300) leading the way.
• Forty-nine markets saw net absorption exceed new supply in Q1 2025, down from 64 markets in Q4 2024 and 50 in Q3 2024.
• Vacancy rates declined in 47 markets quarter-over-quarter in Q1 2025, down from 63 markets in Q4 2024.