In mid‑2025, U.S. rental demand began accelerating, driven particularly by strong activity in Sun Belt cities such as Austin, Phoenix, and Atlanta. According to CBRE’s U.S. Real Estate Market Outlook midyear review, this growth reflects a combination of rising consumer spending, ongoing population migration toward warmer, lower‑cost metros, and easing financial conditions that support both renters and investors. Vacancy rates decreased modestly across these markets, contributing to upward pressure on average rents and sparking heightened investor interest in multifamily and single‑family rental assets.
The increase in demand aligns with broader demographic and economic trends that have shaped the Sun Belt’s housing market for years. These cities continue to attract new residents from more expensive coastal areas, drawn by more affordable living costs, stronger job creation, and favorable tax policies. CBRE analysts note that this migration has stimulated construction and renovation of rental properties and contributed to steady rent growth over the past decade. With household formation rising and home ownership costs remaining elevated, renting has emerged as the default choice for many moving households.
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While a surge in apartment deliveries had previously softened rent growth earlier in the year, by mid‑2025 the market began absorbing new supply more efficiently. CBRE observed initial rent growth across most multifamily markets, though the pace of recovery in high‑supply metros remained gradual. Still, the trend favored landlords and investors as occupancy rose and vacancy dropped. Multifamily assets regained appeal as premier investments, thanks to their reliable cash flow and favorable taxation under U.S. law.
Investment sentiment toward Sun Belt residential real estate strengthened accordingly. A report from Goldman Sachs highlighted that REITs focused on Sun Belt apartments and single‑family rentals have shown greater resilience amid economic volatility, particularly compared to coastal peers. Cities like Miami, Tampa, Austin, Nashville, and Dallas have displayed strong employment fundamentals and consistent housing demand, making them preferred destinations for capital seeking steady returns.
Despite lingering macroeconomic uncertainties—most notably around tariffs, inflation, and interest rates—CBRE projects that multifamily and rental housing will remain among the strongest sectors in U.S. real estate for the remainder of 2025. Consumer spending remains robust, financial conditions are becoming more favorable, and productivity gains are expected to support further housing demand. Vacancy rates will continue to moderate, and rent trajectory is expected to trend upward as fewer tenants choose to purchase in a high-rate environment.
Still, risks remain. Elevated mortgage rates and supply‑chain delays could limit financing and slow new development. Meanwhile, some Sun Belt communities face rising insurance premiums due to climate-related risk, notably in coastal zones, which may alter long‑term investment calculations. Nonetheless, CBRE sees U.S. residential real estate entering a new cycle of investor interest and structural growth, with rent growth likely to be supported by favorable fundamentals in Sun Belt metros.
In summary, mid‑2025 marked a turning point in the Sun Belt rental market. Increasing rental demand, improving occupancy, and declining vacancy across major metros have reinvigorated investor appetite for both multifamily and suburban single‑family properties. Backed by demographic momentum and healthier capital markets, Sun Belt markets are poised to remain a bright spot in U.S. real estate through the year ahead—offering reliable income and long‑term value potential.