Renter Demand Soars in Dallas, Outpacing New Multifamily Deliveries for Fourth Straight Quarter

Renter demand for apartment units remained consistently strong in Dallas-Fort Worth in the second quarter of 2025, with absorption totaling nearly 15,700 units, the highest level since the third quarter of 2021, and marking the fifth consecutive quarter with net move-ins exceeding 10,000 units. Absorption figures through the first half of this year were well ahead of the 2024 pace, and consistent with the elevated demand that has been recorded during the past 15 months. Additionally, absorption has outpaced deliveries of new units in each of the last four quarters, leading to a vacancy decline of 160 basis points year over year. While absorption continues to gain momentum, the pace of supply growth is slowing. Deliveries in the second quarter were down more than 19% compared to the same period last year, and the number of units under construction contracted by nearly 27% as starts have slowed. Supported by tightening vacancies, slowing new deliveries, and continued absorption, rents posted their largest quarterly gain in nearly three years.

Transaction totals in Dallas-Fort Worth for the first half of 2025 exceeded the pace set during the same period in each of the prior two years. Although volumes remain below the peaks recorded in 2021 and 2022, they have returned to just above pre-2020 averages. Deals are being done at a steady pace, with buyers acquiring a mix of 1960s, 1990s, and 2000s-vintage Class B and Class C properties. Meanwhile, Class A units delivered in the past 10 years comprised over half of all transactions in the second quarter. The Frisco and West Plano submarkets have been active spots for the sale of newer properties in recent months, while the remainder of transactions have been distributed across the metroplex. In deals where valuations have been disclosed, per-unit pricing levels have remained consistent over the past few years despite interest rate volatility. Cap rates have also largely held steady during the past several quarters.

Looking ahead

A strong first half to 2025 in the Dallas-Fort Worth multifamily market has set the stage for ongoing improvement throughout the rest of the year. Several key trends show the market is strengthening further. The first was a continued surge in absorption, which began to fully gain momentum in the second quarter of last year and has persisted through the halfway point of 2025. This continued renter demand has pushed vacancy lower in each of the past four quarters. Absorption is expected to drive further tightening in vacancy rates through the rest of 2025. The pace of new construction is slowing, easing supply-side pressures in the market. The final indicator that operators will monitor is the direction of rents in the market. As of the second quarter, rents were still ticking slightly lower on a year-over-year basis but have been improving for three consecutive quarters. Rents are expected to increase in the second half of the year, with a modest gain forecast for 2025 overall.

The Dallas-Fort Worth market is expected to remain a leader in multifamily investment sales activity, with rolling four-quarter transaction volumes improving for four consecutive quarters. The outlook for the rest of 2025 calls for a continued uptick in sales velocity as operating fundamentals strengthen. While interest rates have been higher and more volatile than anticipated from late 2024 through the first half of 2025, potential rate cuts and a more stable, lower interest rate environment in the second half of the year could provide additional stimulus to a market where deals are already being done. To this point, cap rates have remained steady for the past several quarters, but some compression could occur if financing costs ease and rental rates gain momentum in the second half of the year.

Learn more

Contact our Dallas office for more information.