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U.S. apartment rents are rapidly flattening and may soon turn negative, despite healthy demand and a strong economy that continues to produce jobs, according to RealPage chief economist Jay Parsons. The reason for this shift is the large volume of new supply hitting the market which gives renters more options when it comes to deal-shopping – leading to increased turnover among renters in August 2020 compared with a year ago when annual rent growth measured 11%.

Parsons predicts that supply volumes will remain elevated through 2024, creating significant headwinds on rents until 2025 due largely in part to financing issues and other challenges causing construction starts materially dropping off by 2023. This could lead significantly lesser supply by mid-2025 into 2026.