- 52% of U.S. apartments were rented within three months, down from 54% a quarter earlier.
- Newly-built 3+ bedroom apartments rented out faster in the third quarter than other bedroom types.
- One-bedroom and two-bedroom apartments rented out slower as completions climbed by more than 20%.
Just over half (52%) of newly constructed apartments completed in the second quarter were rented out within three months.
The absorption rate, referring to the percentage of new apartments rented out within three months of being finished, was the second-lowest seasonally adjusted share since mid-2020. The rate was down slightly from 54% the previous quarter and eight percentage points lower than a year earlier.
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That’s according to a Redfin analysis of the U.S. Census Bureau’s seasonally adjusted absorption rate data for unfurnished, unsubsidized, privately financed rental apartments in buildings with five or more units, dating back to the first quarter of 2012. Regions are divided using Census definitions. The most recent data available measures apartments that were completed in the second quarter of 2024, and either rented or not rented within three months of then.
Absorption rate returns to pre-pandemic levels as apartment completions rise
The absorption rate over the past two quarters has returned to the 50-55% rate seen in the late 2010s, prior to wild fluctuations during the pandemic where demand rose dramatically in certain areas of the country—especially the Sun Belt.
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The absorption rate has slowed due to the boom in new apartment construction in areas where the pandemic demand spiked between 2020-2022. This led to the highest level of new apartment completions in at least 12 years in the second quarter.
Nationally, the rental vacancy rate for buildings with five or more units was 8% in the third quarter, the highest rate since the first quarter of 2021, another sign that supply continues to outpace demand.
“Thanks to the apartment construction boom, many Americans will remain renters or become renters in 2025,” said Redfin Senior Economist Sheharyar Bokhari. “Many new buildings started during the pandemic are due to come online in coming months. With increased supply, owners are likely to continue offering concessions or even reduced rent to fill their newly completed buildings more quickly.”
It’s worth noting, however, that apartment construction is slowing. This is highlighted in Census data showing that the number of new apartments under construction at the end of October was down nearly 20% from a year earlier. The number of permits issued for new apartment buildings was also down around 20%.
New apartments filling up quickly in the Northeast, taking longer in the South and Midwest
Two thirds (67%) of newly constructed apartments completed in the second quarter in the Northeast region were filled within three months, up from 58% a year earlier.
|
Absorption Rate Q3 2024 |
Absorption Rate
Q3 2023 |
2023→2024 Difference | |
| Northeast | 67% | 58% | +9 ppts |
| Midwest | 51% | 61% | -10 ppts |
| South | 53% | 58% | -5 ppts |
| West | 58% | 72% | -14 ppts |
Meanwhile, new apartments filled up slowest in the South, with the absorption rate dropping to 51%, down five percentage points year over year. The South has been at the heart of the recent construction boom, with developers scrambling to meet the demand from high levels of pandemic-driven migration to many Sun Belt metros, especially in Florida and Texas. Emphasizing this, there were nearly as many new apartments completed in the South region in the second quarter as the other three regions combined.
The West region saw the absorption rate drop the most from a year earlier, down 14 percentage points to 58%.
3+ bedroom apartments fill up fastest; absorption rate slips for other bedroom types
New three-plus-bedroom apartments—the rarest bedroom type—were rented out the fastest in the third quarter, with 63% rented out within three months, up from 56% a year earlier. This came despite a 48.6% rise in completions.
New Apartment Absorption Rate and Completions by Bedroom Count
| Absorption Rate | Absorption Rate YoY | Completions | Completions YoY | |
| Studio | 50% | -13 ppts | 8,858 | 8.1% |
| 1 Bedroom | 52% | -10 ppts | 54,130 | 21% |
| 2 Bedrooms | 58% | -3 ppts | 46,860 | 26.1% |
| 3+ Bedrooms | 63% | +7 ppts | 8,770 | 48.6% |
Studio apartments saw the biggest slowdown, with only 50% rented out within three months, down 13 percentage points from a year ago.
Completions of more common one- and two-bedroom apartments rose 21% and 26.1% respectively in the second quarter year over year, leading to a slower absorption rate for both categories.
Please note that absorption rate data by bedroom type is not seasonally adjusted.
