Across the country, 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.
That’s according to a new report from online real estate brokerage Redfin.
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. This was the fifth consecutive quarter that the rental absorption rate was below 50%, a speed that continues to lag behind pre-pandemic norms, Redfin said.
Similar to national trends, the Austin-area apartment market has softened due to an influx of new apartment units, which coincides with slower job growth and reduced migration into the five-county Central Texas region.
In December, Matt Enzler, senior managing director of Trammell Crow Residential’s North Texas division, told the Statesman that, after a decade as one of the nation’s strongest apartment markets, the Austin area was now experiencing “a huge delivery of new units.”
“There are plenty of prospective renters, but with so much new supply they have lots of choices on where to rent,” Enzler said. “That is what is driving the rental rate decreases and increased concessions.”
According to the Redfin report, 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 Sheharyar Bokhari, a Redfin senior economist. “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, Redfin said.
In the December Statesman article, local experts echoed that view. Some said it could be 2027 before rents stabilize and start rising again.
In that article, Enzler said starts for new apartment construction were down more than 80% since the peak in 2022. Since then, it has been “very difficult” to start new projects, Enzler said.
Enzler predicted that this year, 2025, would bring “dramatically lower deliveries and 2026 will be well below the historical norms” for new openings of apartment projects.
Since it takes 18 to 24 months to bring new units to market, “the delivery pipeline is drying up, and we will see very few deliveries in late 2026 and 2027,” Enzler said in the December Statesman article.
“Construction costs are still high, and financing is difficult, so very few projects are getting started. The math doesn’t work when costs are high and rents are low,” he said. “However, with very little supply coming in 2026 and beyond, it is reasonable to expect meaningful rent growth again in 2027.”
This article originally appeared on Austin American-Statesman: Nation’s apartment surplus puts renters in driver’s seat, Redfin report says
Reporting by Shonda Novak, Austin American-Statesman / Austin American-Statesman
USA TODAY Network via Reuters Connect
