Rent growth trends have varied significantly by market segment and region. By price class, all tiers except Class D experienced year-over-year improvement. The strongest growth was seen in Class A properties, where average effective rent increased by 2.7% through October—more than three times last year’s growth for the same period. Class B properties also showed a substantial increase of 2.5%, doubling their prior-year performance.

Regional differences have also been pronounced. The Midwest, particularly the Great Lakes region, has outperformed national averages, benefiting from lower rates of new supply that allowed occupancy levels to remain relatively stable. Cities like Cleveland-Akron, Chicago, Kansas City, Columbus, Cincinnati-Dayton, Indianapolis, and Detroit saw average effective rents rise between 4% and 6% so far this year.

Key Takeaways

With new supply reaching unprecedented levels and national net absorption significantly negative, it is no surprise that most attention has been on supply and demand metrics, as well as occupancy challenges. However, there are positive takeaways in rent performance.

Steady demand improvements have helped slow the decline in rent growth and even reversed it slightly in the latter part of the year. Rent growth persisting later into the year compared to 2022 and 2023 signals potential for more stability. Although monthly rent growth may turn negative soon, the outlook for 2025 could see rent growth surpassing 3%, contingent on reduced new deliveries and ongoing demand recovery.