The fourth quarter of 2025 registered the weakest rental performance since the global financial crisis.
Highlights:
- The average U.S. advertised asking rent declined $5 to $1,737 in December, resetting all yearly gains to 0.
- Rents went down 30 basis points month-over-month, with just six out of Matrix’s top 30 markets posting gains.
- Despite a weak rental showing, multifamily transaction volume still grew in 2025 to $83.2 billion, up from $82.4 billion in 2024.
- SFR-BTR average advertised rents ticked down $4 to $2,180 in December, down 1% year-over-year, marking the steepest drop in more than a decade.
No rent growth in 2025 marks the weakest showing in five years
During the fourth quarter of 2025, multifamily advertised asking rents slipped 0.9%, or $16, to $1,737 in December, marking the weakest performance since the global financial crisis. On a year-over-year basis, the growth was zero—a rare happenstance with the last two such occurrences taking place in 2020 and 2010. Certain gateway and Midwest markets bucked national trends and registered yearly gains, such as New York City (5.8%), Chicago (3.6%), Twin Cities (3.2%), Kansas City (2.6%), San Francisco (1.9%). Western and Sun Belt metros exhibited negative growth, including Austin (-5.2%), Phoenix (-4.1%), Las Vegas (-2.5%) and Portland (-2.0%).
On a monthly basis, U.S. advertised rents fell 30 basis points in December, with just six out of the Matrix top 30 markets posting gains. Metros that registered short-term gains were clustered around the Midwest, led by Kansas City (0.7%), Columbus, Baltimore and Detroit (0.4% each). Such markets proved resilient due to limited new supply and greater affordability. Inversely, Sun Belt metros that are still absorbing waves of deliveries experienced softening demand, which led to weaker pricing. Coastal markets, while not as affected by supply growth, underwent affordability challenges amid economic uncertainties, which shifted renter preferences.
The national occupancy rate clocked in at 94.6% in November, unchanged year-over-year. Demand remained strong, with some markets posting yearly gains despite weakening rent growth, suggesting demand is outpacing pricing power. Sun Belt markets, including Atlanta (0.9% year-over-year) and Phoenix (0.3%), were among the metros that recorded higher occupancies with new units being absorbed as well, although owners ended up making concessions reflected by soft rental growth.
Multifamily investment grows with coastal assets in high demand
Despite a deflating rental display, investment continued to pour in. National sales volume totaled $83.2 billion in 2025, up from $82.4 billion in 2024 and $69.5 billion in 2023. Sun Belt and secondary markets attracted most activity, with Dallas and Seattle ($3.9 billion each) leading the way. Traditional gateway markets, including Chicago ($3.6 billion), Boston and Los Angeles ($2.8 billion), as well as New York City, Washington, D.C., and San Francisco ($2.4 billion each), were also among the top deal performers. Competition and demand were fiercest across such gateway metros as they posted the lowest cap rates, including San Francisco’s South Bay (3.8%) and Peninsula (4.1%), as well as Manhattan (4.1%) and Los Angeles (4.3%).
Single-family build-to-rent rates declined $4 to $2,180 in December, marking a 1% drop year-over-year—the steepest in more than a decade. Mirroring multifamily trends, BTR rents grew across certain Midwest markets, including Twin Cities (7.7% year-over-year), Chicago (7.0%) and Grand Rapids (4.5%). The occupancy rate remained stable at 94.9 percent, growing 10 basis points year-over-year. This would suggest that the rental softening is not due to demand, which proved resilient against the backdrop of slow single-family home sales, but rather due to a market correction as owners are willing to concede prices and maintain higher occupancies, especially in markets with high supply.
Read the full Yardi Matrix Multifamily National Market Report: December 2025.
Add Comment