U.S. rental market shifts as vacancy rates reach 7.3%

The U.S. rental market is experiencing a shift as high vacancy rates and increased supply begin to stabilize. According to the U.S. Census Bureau, the national rental vacancy rate reached 7.3% in the second quarter, up from a 5.6% low at the end of 2021.

To compete for tenants, multifamily operators have increasingly relied on concessions. Zillow reported that roughly 2 in 5 listings offered perks such as free rent or waived fees in July, a significant increase from pre-pandemic levels where concessions were found in only about 1 in 6 listings. However, market conditions vary significantly by region. While Sunbelt metros like Charlotte, Denver, and Dallas see high concession rates and flat or falling rents, cities like San Francisco have seen rents rise by 9.7% due to limited new supply.

As construction completions slow and absorption rises, experts expect the market to tighten and concessions to become less common. Research from AppFolio suggests that as renter leverage decreases, operational factors like maintenance will become critical for retention, with maintenance satisfaction being a primary driver of overall renter satisfaction.