Apartment Supply Drops as Demand Hits Record Levels

A Shift in the Balance

RealPage reports that after years of supply-heavy conditions, the US apartment supply market is turning. Developers finished nearly 536,000 units in the year-ending Q2 2025. That’s still strong, but below the peak recorded two quarters ago. Q2 marked the first time in over 15 years that annual inventory growth fell more than 20 basis points in one quarter. Much of today’s elevated supply reflects the heavy completion pace in late 2024.

Demand Roars Back

Renter demand is surging. The US absorbed more than 794,000 units over the past year, setting a new record. That’s more than double the recent five-year average. For the third straight quarter, demand exceeded apartment supply, creating a nationwide demand surplus. This is a sharp reversal from the supply-heavy environment seen from 2022 through much of 2024.

Market Standouts

Houston, Chicago, Los Angeles, and Atlanta led the nation in demand surpluses over the past year. Atlanta’s showing is remarkable since it also delivered one of the largest new supply totals in the country.

Why It Matters

With fewer apartments hitting the market and demand climbing, competition for rentals could intensify. That may put upward pressure on rents in the months ahead. Developers also face a smaller window to launch new projects before market conditions tighten further.