BRUTAL: Only 47% of new Q4 apartments rented within three months, a 60% drop.

According to a recent report from Redfin, less than half (47%) of newly constructed apartments completed in the fourth quarter of 2024 were rented within three months. This figure represents a significant decline from the previous year when 60% of new apartments were rented within the same timeframe. In fact, it’s the lowest seasonally-adjusted share on record aside from the first quarter of 2020, during the onset of the pandemic.

The surge in new apartment construction has led to increased supply, resulting in building owners competing for tenants. A total of 90,260 new apartments were completed in Q4 2024—the second-highest number since records began in 2012. Despite this, the rental vacancy rate has remained at 6.6% for the past three quarters, the highest level since 2021.

While the backlog of new units is limiting rent price growth, demand from renters who cannot afford to buy their own homes is keeping rents near record highs. The median U.S. apartment asking rent rose 0.8% year over year in May 2024, reaching the highest level since October 2022. Affordability varies across markets, so renters may find room for negotiation in areas with abundant new apartments, while deals may be scarcer in regions with limited supply.

It's absolutely brutal out there…

Only 47% of newly constructed apartments completed in Q4 were rented within three months. That's a 60% decline from a year earlier and is the lowest share on record aside from Q1 2020. t.co/PQzLRNORWP pic.twitter.com/O2HldIATwg

— Piker (@PikerCapital) July 1, 2024