Redfin Reports New Apartments Are Sitting Vacant for Months, Giving Renters Power to Negotiate Concessions
New apartments are being completed at near-record levels, with the increase in supply keeping rents down and providing renters with more opportunities to negotiate concessions
(NASDAQ:RDFN) — Less than half (49%) of newly built apartments completed in the fourth quarter of 2024 were rented within three months, up slightly from 47% the previous quarter. That's according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. This was the fifth consecutive quarter that the rental absorption rate was below 50%, a speed that continues to lag behind pre-pandemic norms.
The rental vacancy rate for buildings with five or more units was 8.2% in the first quarter of 2025, tied with the previous quarter for the highest level since the start of 2021.
Apartments are taking longer to rent because there are record numbers of them coming onto the market. Nearly 125,000 new apartments were completed in the fourth quarter—the second highest number on record—following the previous quarter's all-time high (142,900).
The increase in supply has created a much healthier market for renters, with asking rents dropping slightly recently after remaining largely stable over the past two years.
"Renters are in a relatively rare position where they can finally benefit from market conditions rather than scramble to keep up with them," said Redfin Senior Economist Sheharyar Bokhari. "With more apartments available, renters can afford to be a little more picky about where they want to live and are in a stronger position to negotiate for concessions like flexible lease terms, lower rents or free parking."
Approvals for multifamily construction permits have dropped to pre-pandemic levels, however, indicating that new apartment supply will start to taper off in coming months. That is likely to eventually lead to higher absorption rates and an uptick in asking rents.
3+ bedroom apartments filling up at fastest rate
Larger 3+ bedroom apartments completed in the fourth quarter were rented at the fastest rate among different bedroom types, with 53% leased out within three months.
That rate was unchanged from a year ago, even though there was a 58.6% year-over-year increase in the number of apartments being completed.
|
Apartments
|
YoY change
|
Absorption rate
|
YoY change in
|
Median asking rent
|
YoY change in
|
Studio |
9,912 |
11.8% |
47% |
9 ppts |
$1,726 |
23.5% |
1 beds |
60,320 |
34.6% |
44% |
4 ppts |
$1,736 |
9.6% |
2 beds |
47,240 |
49.8% |
44% |
3 ppts |
$2,063 |
4.4% |
3+ beds |
8,610 |
58.6% |
53% |
No change |
$2,423 |
0.5% |
The absorption rate for more common 1-bedroom apartments was 44%, up from 40% a year ago. That was the same rate recorded for 2-bedroom apartment types, up from 41% a year ago.
Studio apartments recorded the biggest absorption rate increase across the different bedroom types, with 47% rented within three months, up from 38% a year ago.
To view the full report, please visit: https://www.redfin.com/news/rental-absorption-q1-2025
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 [email protected]. To view Redfin's press center, click here.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250530472739/en/
Contact Redfin
Redfin Journalist Services:
Kenneth Applewhaite, 206-414-8880
[email protected]