Softening fundamentals in the U.S. apartment market resulted in effective asking rents falling 0.3% in 3rd quarter. This was the first time rents have been cut between July and September since 2009, at the end of the Great Financial Crisis. In the year-ending 3rd quarter, rents were down a mild 0.1%.

Nearly 22% of apartments were offering concessions as of 3rd quarter, and the average concession was 6.2%. As operators focus on filling units in the coming months, concession utilization could become even more prevalent, making true rent growth harder to realize until discounts burn off.

Source: RealPage

Newmark shows their estimated size of the “potentially troubled” multifamily loans by year in the graph below. While $81 billion sounds like a lot, it’s less than 5% of the total multifamily debt market, and most of this stack will continue to get pushed forward into the future with lenders and property owners hoping interest rates come down or their NOI improves (or both).

Most graphs show commercial real estate cap rates in relation to the 10-year treasury, but the graph below adds investment grade corporate bond yields.

Why the two do not interact the same way cap rates and the 10-year treasury do, it is instructive to see what investors are paying relative to other risk assets.

Source: Gavin Campbell

For nearly 250 years, America has only known growth. 2025 could be the first year on record the US population shrinks. Population growth has two sources:

• Natural increase (births minus deaths)
• Net immigration (arrivals minus departures)

Last year, births outnumbered deaths by 519,000, and AEI estimates that net migration in 2025 could be negative 525,000. 

In many states, foreign-born workers make up more than a third of the construction workforce:

Source: Derek Thompson

Source: Jay Parsons

As of 2nd quarter 2025, Class A rental rates were up 2.3% year-over-year, while Class B stock grew 0.8% (less than the U.S. average). Class C stock continues to see rent cuts of 1.1%.

Source: RealPage

In the U.S. overall, just over 354,000 units were under construction at the end of 2nd quarter and scheduled for completion in the coming year. That is a 33.9% decline from the roughly 535,800 units completed in the year-ending 2nd quarter 2025.

Source: RealPage

The BLS’ New Tenant Rent Index fell 9.3% year-over-year through the end of Q2 2025. This data tracks what is happening with rents much closer to real time and tends to lead the shelter component of CPI (which tracks the rental market on a significant lag and uses a concerning amount of survey data).

If the CPI’s shelter component “catches down” to the New Tenant Rent Index it would provide significant downward pressure on CPI prints in the coming months.