As seen in GlobeSt.
Vacancy rates fall sharply as demand outpaces deliveries.
The multifamily housing market has set a new benchmark for demand, according to CBRE Research. Net absorption—a measure of new leases signed and occupied—climbed 44% year-over-year to 188,200 units, the highest second quarter figure ever recorded. This level is also 44% higher than the average for the same period before the pandemic.
This milestone comes after several quarters where completions consistently lagged behind the pace of leasing. Quarterly data from CBRE Research reveal a marked acceleration in demand. Recent quarters saw the following patterns: in Q1 2023, 62,000 units were completed and net absorption was just 4,000 units; by Q2 2025, completions held steady at 83,000 units, while demand soared to 188,000 units. Notably, in the most recent quarter, more than two units were leased for every unit completed.
The rolling four-quarter net absorption now stands at 665,000 units—just 5% below the all-time record, CBRE reported. Still, analysts expect absorption rates to moderate as both new deliveries and overall vacancy rates continue to decline.
Virtually every major U.S. market participated in the upswing. All 69 markets tracked by CBRE recorded positive net absorption in the quarter, and 66 saw year-over-year increases. New York led the nation with 19,300 units absorbed, followed by Chicago, Dallas, Atlanta and Boston. Other top-performing cities included Houston, Los Angeles, Washington, D.C., Minneapolis and Phoenix.
Several factors are fueling the surge, CBRE noted. Recent years have seen a wave of new construction, as previously reported by GlobeSt.com. This rapid addition to supply temporarily outpaced demand and pushed occupancy rates down. Now, with construction slowing and demand rising, the market dynamic has reversed — net absorption has exceeded new deliveries for five straight quarters.
This uptick in leasing is driving vacancy rates lower. Over the past year, the national vacancy rate has fallen by 70 basis points to 4.1%, marking the second-largest second-quarter drop on record, according to CBRE. Fifty markets now have vacancy rates below their pre-pandemic averages. Percentages declined quarter-over-quarter in 68 of 69 tracked markets, up from 51 markets the previous quarter. As completions continue to slow, CBRE expects this trend to persist.
At the close of Q2 2025, 29 markets reported vacancy rates below 4%, a substantial increase from 11 in the previous quarter. Fewer markets are reporting higher levels: 21 with rates between 4% and 5%, down from 27 and 19 with rates above 5%, down from 31.
As the market enters the second half of 2025, CBRE predicts that tight supply and robust demand will continue to shape the multifamily sector, potentially rooting vacancy rates firmly below pre-pandemic levels while moderating the recent surge in leasing activity.
