🚨U.S. multifamily rent growth turned negative in Q3 2025, with national effective rents down –0.3%, the first summer leasing-season decline since 2009. Net absorption slowed to 637,100 units over the past year—down 19% from Q2’s record—while ~105,500 new units delivered in Q3 alone pushed occupancy to 95.4% (–30 bps QoQ). Rising concessions and regional bifurcation now define the market, with the Sunbelt facing –1.6% YoY rent declines and the Midwest still positive. CRE lenders are repricing risk accordingly, widening spreads and tightening underwriting.
National effective rent change: –0.3% QoQ (Q3 2025) — [Source: RealPage].
Net absorption: 637,100 units (12-month total ending Q3 2025) — [Source: RealPage].
National occupancy: 95.4% (Q3 2025, –30 bps QoQ) — [Source: RealPage].
Sunbelt YoY rent change: –1.6% vs Midwest +2.4% — [Source: RealPage Analytics].
Loan Performance. Flat to negative rent growth and rising expenses compress DSCR, especially for 2021-vintage bridge loans. Borrowers face thinner cushions; refinancing now demands 25–50 bps higher cap rates and tighter proceeds.
Demand Dynamics. Weak absorption reflects slowed household formation and renter doubling-up. Midwest and Northeast outperform on limited supply; Sunbelt metros confront 3–4% of stock under delivery, pressuring rents and renewals.
Asset Strategies. Operators pivot to retention incentives—1–2 months’ free rent, gift cards—to sustain occupancy. Proactive renewal outreach and cost-control become key to preserving NOI.
Capital Markets. Lenders favor stabilized, low-LTV assets; transitional debt faces pricing friction. CMBS and agency quotes show +25–40 bps spread widening since summer, reflecting localized rent softness.
Peak-supply drag moderates fundamentals through mid-2026.
Midwest/Northeast = defensive; Sunbelt = oversupplied.
Lenders favor stability; bridge/lease-up debt constrained.
Underwrite exits +25–50 bps above current cap rates.
🛠 Operator’s Lens
Refi. Stress-test DSCR at flat rents; lock fixed-rate refis early.
Value-Add. Capex only if rent lift > concession delta; include 2–3% reserve buffer.
Development. Phase starts; delay non-funded projects until absorption catches up.
Lender POV. Agencies hold pricing; banks tighten proceeds and require higher DSCR for Sunbelt lease-ups.
Peak 2025 supply suggests 2026 tightening as starts drop sharply. Q4 leasing velocity will show whether absorption rebounds. Watch Sunbelt rent trends and early distress in Texas as bellwethers for credit re-rating. Macro headwinds from slower job growth could delay recovery, but fundamentals remain intact long-term.
RealPage — “U.S. Apartment Rents Dip in Q3 2025” (Oct 7 2025). https://www.realpage.com MBA Newslink — “Multifamily Supply Surge Pressures Occupancy and Rents” (Oct 7 2025). https://newslink.mba.org Trepp — “Conduit Loan Spread Weekly Report” (Sep 2025). https://www.trepp.com/treppinsights-conduit-loan-spreads
