Continued Demand for Multifamily Offsets Impact of New Deliveries in Raleigh-Durham

After peak deliveries in 2024, the pace of multifamily completions remained strong during the opening months of 2025, continuing to apply upward pressure on vacancy rates. Supply-side pressures have been persistent in Raleigh since early 2023, but renter demand has reached new highs. Although area vacancy trended higher for a second consecutive quarter, strong absorption levels have helped maintain relatively stable conditions, with the vacancy rate finishing the first quarter just 10 basis points above the rate from one year ago. Apartments recorded net move-ins of approximately 2,900 units during the first quarter, surpassing the region’s trailing five-year average of 1,100 units for this period. Operators continue to prioritize occupancy as the increase in competitive supply has made sustaining rent growth challenging over the past two years.

Multifamily sales remained limited in the opening months of 2025. Of the properties that did change hands during the first quarter, 75% were 1990s-vintage garden-style apartments, all of which had been sold previously within the last ten years. The recent sales activity has represented a shift; since the beginning of 2024, most assets sold have been 2020s-vintage properties or value-add opportunities. Pricing trended higher in the first quarter of 2025, largely driven by the sale of a large Class A property that traded for more than $360,000 per unit, the highest per-unit price since late 2023. The median price through this point in 2025 is $229,900 per unit, slightly higher than the 2024 median price. However, despite this increase, current prices trail levels recorded in 2022 and 2023.

Looking ahead

Renter demand is expected to remain strong through the remainder of 2025, supported by a declining pace of new deliveries as the year progresses. Projects totaling 11,000 units are projected to be completed this year, down from the peak recorded in 2024 but still above Raleigh-Durham’s long-term average. Although supply will remain elevated in the near term, development activity is projected to slow precipitously in 2026. The accumulated inventory expansion since 2023 is expected to keep vacancies above long-term averages, but demand should help maintain stable vacancy rates and support modest rent growth.

Sales activity in the Raleigh-Durham multifamily investment market will likely remain light in 2025, but the long-term outlook is favorable as new deliveries stabilize. In addition to interest rate volatility, strong inventory growth over the past few years has hindered rent growth, which has impacted underwriting assumptions for acquisitions. However, these conditions will likely begin to improve in the coming years, and sales velocity should accelerate closer to traditional levels in 2026. As conditions continue to tighten and rents eventually gain traction, investors are likely to re-enter the market, with properties built within the past five years expected to remain a sizeable portion of the transaction mix.

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