Rental vacancy rates

The US rental vacancy rate is projected to reach 7.1% in 2025, representing continued growth over the previous year. This expansion reflects ongoing adjustments in rental market conditions as elevated interest rates and economic uncertainty reduce housing demand while new multifamily construction completions add supply to previously constrained markets. The increase indicates a meaningful loosening of rental market tightness that has characterized recent years, providing modest relief to prospective tenants who have faced severe affordability pressures and limited housing options. Regional variations remain significant, with high-cost metropolitan areas like San Francisco, New York, and Seattle experiencing more pronounced vacancy increases while affordable markets in the South and Midwest show smaller adjustments. Construction deliveries of purpose-built rental properties are contributing meaningfully to supply expansion, particularly in suburban markets where development activity has accelerated to meet demand from households seeking larger living spaces and lower costs compared to urban cores.

US rental vacancy rates have demonstrated exceptional volatility over the past five years, reflecting unprecedented disruptions to housing markets and demographic patterns during and after the COVID-19 pandemic. The period began with vacancy rates at 6.3% in 2020, representing a significant decline as pandemic lockdowns and economic uncertainty initially reduced household mobility and prompted many renters to delay housing decisions, temporarily tightening market conditions despite broader economic disruption.

The trajectory became increasingly constrained through 2021 and 2022, with vacancy rates falling to 6.1% and then 5.8% respectively, representing some of the tightest rental market conditions in decades. This extraordinary tightness reflected the convergence of multiple factors including massive fiscal stimulus that enhanced household purchasing power, record-low interest rates that encouraged homebuying attempts and reduced rental supply conversion, and demographic shifts as millennials reached peak rental demand ages while facing homeownership affordability constraints.

The most dramatic shift occurred beginning in 2023, when vacancy rates surged 12.1% to 6.5%, marking the largest single-year increase since the Great Recession period. This sharp adjustment reflected the delayed impact of Federal Reserve interest rate increases, which simultaneously reduced homebuying demand (forcing more households to remain renters) while constraining new rental unit absorption as economic uncertainty affected household formation and mobility decisions.

Recovery continued through 2024 with vacancy rates reaching 6.8%, though this expansion represented market normalization rather than fundamental loosening, as rates remained below long-term historical averages. The composition of rental markets has evolved significantly during this period, with luxury and high-end rental properties experiencing greater vacancy increases while affordable housing units maintain relatively tight conditions due to persistent demand from cost-constrained households. Geographic patterns have also shifted, with expensive coastal markets showing more pronounced vacancy increases as remote work flexibility enables migration to lower-cost regions, while previously affordable markets in the Sun Belt and Mountain West have experienced continued tightness due to population inflows.