Multifamily Demand Remains Strong in Raleigh as Supply Growth Begins to Ease

The pace of multifamily deliveries began to taper off in recent months following a period of heightened completions. Projects totaling approximately 2,400 units came online during the second quarter, down 33% from the first quarter. Additionally, the development pipeline has contracted roughly 30% during the past year. Although supply-side pressures are beginning to ease, the cumulative impact of the inventory growth in recent years continues to push local vacancy higher. Vacancy closed the first half at 8.0%, up 50 basis points year over year, though increases are being mitigated by robust absorption levels. Year to date, apartments in Raleigh-Durham have recorded net move-ins for more than 5,100 units, closely tracking the pace set in the same period of 2024, a year in which net absorption reached a cyclical high. Although vacancy is up across most areas in the region, conditions in Chapel Hill, East Raleigh, and Northeast Raleigh have all improved during the past year, as renter demand has increased more dramatically in these areas. Asking rents inched lower on a year-over-year basis, as operators prioritize occupancy over rental increases.

Sales activity in the Raleigh-Durham multifamily investment market continues to trail traditional levels, with transaction volume in the first half of 2025 matching the light levels recorded during the same period in 2024. The median price to this point in the year is $208,200 per unit, down 6% from last year. Pricing has trended lower despite 40% of sales so far in 2025 involving assets built in the 2020s. Last year, assets completed since 2000 accounted for roughly 75% of transactions; this figure has fallen to 50% in 2025, with no properties from the 2010s changing hands. The absence of 2010s vintage deals has driven some of the price decline, as these assets previously traded between $200,000 per unit and $275,000 per unit, reaching as high as $350,000 per unit in some cases. Recent sales activity has been dispersed across the market, with no submarket posting more than one transaction exceeding $10 million in 2025. Historically, submarkets like Northeast Raleigh, North Cary/Morrisville, Downtown Durham, and Downtown Raleigh have led in sales activity.

Looking ahead

Multifamily completions are scheduled to continue through the end of the year, as projects totaling 11,000 units are expected to come online in 2025, lagging last year's peak but remaining above the historical trend. Healthy employment growth and net-migration should sustain renter demand, leading to vacancy conditions stabilizing after four years of gradually rising higher. The vacancy rate will likely remain around 8.0% through the end of 2025. Rent growth is projected to remain relatively flat in the coming quarters as the Raleigh-Durham multifamily market continues to progress through the recent inventory additions. Rent gains should ramp up in 2026 once the pace of multifamily deliveries slows.

Transaction volume in the Raleigh-Durham multifamily investment market may continue to trail historic levels but will likely outpace total sales recorded in 2024. Elevated inventory growth and relatively flat rental trends in recent years have dragged on sales activity, but these conditions should begin to improve in late 2026 and early 2027. Assets built within the past five years are expected to continue to account for the greatest share of the sales mix through the end of 2025, as these properties have strong potential once rent growth picks up. Additionally, sales velocity for properties built between 2000 and 2019 may accelerate, after limited volumes in the first half.

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