SEATTLE--(BUSINESS WIRE)--(NASDAQ: RDFN) — Less than half (47%) of newly built apartments completed in the third quarter of 2024 were rented within three months, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s tied with the fourth quarter of 2023 for the lowest share on record aside from the start of the pandemic.
This is according to a Redfin analysis of the U.S. Census Bureau’s seasonally adjusted absorption rate data for unfurnished, unsubsidized, privately financed rental apartments in buildings with five or more units, dating back to 2012. The most recent data available covers apartments completed in the third quarter of 2024, and either rented or not rented within three months of then.
Apartments are filling up slowly because renters have a lot of options to choose from; there were 142,900 new apartments completed in the third quarter—the highest number on record.
“Some landlords are slashing prices and offering concessions like free parking to woo tenants, but renters should know that these perks could start to dry up,” said Redfin Senior Economist Sheharyar Bokhari. “Builders are slowing their roll, with permits to construct apartments down almost 10% year over year. This means renters will eventually have fewer apartments to choose from, which could embolden landlords to boost rents—though that may not happen until well into next year because a lot of apartments built during the pandemic are still coming on the market.”
During the pandemic moving frenzy, apartments were filling up at record speed due to soaring demand, which drove up rents. To help meet that demand, builders ramped up construction, which led to more vacancies and lower rents. The rental vacancy rate for buildings with five or more units ended 2024 at 8.2%—the highest level since the start of 2021. The median U.S. asking rent is now $1,607, up 0.4% year over year but roughly $100 below its record high. While rents are no longer falling like they were in 2023, the small increases they’re posting are a far cry from the double-digit growth seen during the pandemic.
Studio apartments are filling up faster than last year
The absorption rate for apartments completed in the third quarter was roughly the same across bedroom types: around 50%. With the exception of studio apartments, all bedroom types were absorbed at a slower pace than a year earlier.
Half (50%) of studio apartments completed during the third quarter were rented within three months, up from 42% a year earlier. Meanwhile, the absorption fell to 49% from 54% for 1-bedroom apartments, fell to 50% from 51% for 2-bedroom apartments, and fell to 51% from 56% for 3+-bedroom apartments. The market for studio apartments may be holding up relatively well because there aren’t as many available; completions of all other bedroom types posted double-digit increases in the third quarter, while completions of studios only rose 0.4%.
| Apartments completed in Q3 2024 | YoY change in apartments completed | Absorption rate for apartments completed in Q3 2024 | YoY change in absorption rate | Median asking rent of new apartments (Q4 2024) | YoY change in median asking rent for new apartments |
Studio | 7,739 | 0.4% | 50% | 8 ppts | $1,601 | -0.3% |
1 bedroom | 69,440 | 78.8% | 49% | -5 ppts | $1,619 | -0.5% |
2 bedrooms | 57,770 | 85.6% | 50% | -1 ppt | $2,005 | 1.9% |
3+ bedrooms | 8,666 | 20.9% | 51% | -5 ppts | $2,362 | -5.1% |
Please note that absorption rate data by bedroom type is not seasonally adjusted.
To view the full report, including charts, please visit:
https://www.redfin.com/news/apartments-rented-near-slowest-rate-on-record
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, and title insurance services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.8 billion in commissions. We serve approximately 100 markets across the U.S. and Canada and employ over 4,000 people.
Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.
