📢 National average asking rent slipped to $1,713 in August, down 0.23% month over month, the largest monthly drop since January. All four regions were flat to negative, with the West and South leading declines. Annual growth has slowed to ~1%, confirming a broad softening beyond seasonality as the 2024–2025 delivery wave lands. Oversupplied markets like Austin, Phoenix, and Denver are in outright contraction, while supply-disciplined San Francisco, Chicago, and New York still post gains.
Avg U.S. rent: $1,713 in Aug; −0.23% MoM.
Regional MoM: West −0.5%, South −0.4%, Midwest −0.2%, Northeast −0.1%.
Annual: West −1.3%, South ~0%, Midwest +2.5%, Northeast +2.2%.
Annual growth: ~1% (vs. 1.5% in Jan).
Metros YoY: Austin −4.7%; Phoenix and Denver −3%+; San Francisco +6.2%; Chicago +3.9%; NYC +2.8%.
Loan Performance
Loan Performance. Slowing rent growth collides with higher debt costs. CMBS multifamily delinquencies rose to 6.86%, a nine-year high, concentrated in recent deliveries and higher-leverage assets. Extensions and tighter agency underwriting (lower LTVs, higher DSCR) are filtering capital toward stabilized properties, leaving lease-ups exposed to prolonged concessions and slower burn-off.
Demand Dynamics
Demand Dynamics. Elevated deliveries shift bargaining power to renters in Sun Belt metros, elongating lease-ups and lifting concessions. Class B/B− assets with value positioning should defend occupancy as some renters trade down. Supply-constrained coastal and Midwest markets sustain modest rent gains due to barriers to entry rather than outsized demand growth.
Asset Strategies
Asset Strategies. Underwrite zero to negative rent growth for 12–18 months in oversupplied markets. Stretch lease-up timelines, budget heavier concessions, and prioritize durable demand nodes near jobs. In softer cores, favor defensive capex that protects occupancy over premium repositionings that require rent lifts to pencil. Expense growth of 3–5% with flat rents compresses NOI, so operators must harvest savings and retention
Capital Markets
Capital Markets. Cap rates in many Sun Belt cities have expanded ~50–100 bps from 2021 lows to reflect slower income growth and pricier debt. Agency liquidity remains for stabilized deals, while construction and bridge capital are selective. With starts rolling over, investors expect the supply overhang to clear into 2026, setting up a gradual re-acceleration of rents and values once absorption catches up.
Record deliveries stalled pricing power; renters’ market in select metros.
Sun Belt outbuilds demand; coasts/Midwest benefit from barriers.
Flat rents + rising expenses squeeze NOI; defend occupancy.
Supply taper and rate stability could restore balance by 2026.
🛠 Operator’s Lens
Leasing: Lock renewals early with modest bumps, flexible terms, and targeted perks in competitive submarkets; protect occupancy against lease-up incentives next door.
Financing: For floaters, evaluate refi or rate caps now; agencies favor stabilized, lower-LTV loans in softer markets
Near term, national rent growth likely runs 0–1% into early 2026, with negative prints persisting in oversupplied metros. Occupancy could dip another 50–100 bps where deliveries peak, keeping concessions elevated through next summer.
Capital pivots to stable cash flows in suburban garden and workforce assets while Class A urban lease-ups digest supply. As starts fall and borrowing costs stabilize, absorption should catch up by late 2026, enabling 2–3% national rent growth and firmer values into 2027
CoStar, apartment.com
Chart 1 – Regional Apartment Rent Change (August 2025)
Chart 2 – Apartment Rent Change by Metro (2025 YTD)
