The U.S. apartment sector is well-positioned to capitalize on shifting sector dynamics, creating potentially long-term opportunities within the market. Below, we examine what factors are driving these changing conditions, and where investors may find value.
The pullback in construction bodes well for future fundamentals
The U.S. apartment market experienced the greatest supply growth on record in 2024. The onset of new supply challenged apartment operators’ ability to grow rents and maintain occupancy above the sector’s long-term average. Our research analysis of supply and rent growth data from RealPage Market Analytics indicates markets that experienced supply growth of 3.0% and below averaged 2.2% rent growth in 2024. Conversely, markets that experienced supply growth above 3.0% averaged -1.6% rent growth in 2024. In other words, markets with higher-than-average supply growth, saw rents fall.
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