Apartment Landlord Concessions Rise as Market Faces Supply Surge and Softer Demand
Apartment landlords across the United States are increasingly offering move-in incentives to attract tenants, a clear sign of a market adjusting to a historic wave of new supply and shifting economic conditions. According to new data from RealPage Market Analytics, 16.6% of stabilized apartments offered concessions in January. This marks a full percentage point increase from December and represents the highest rate of concession activity since mid-2014.
What Are Concessions and How Widespread Are They?
Concessions are incentives, typically in the form of free rent for one or more months, offered to new tenants to secure a lease. The average discount in January stood at 10.7% of the listed rent, which translates to roughly five weeks of free rent. This level was consistent with the average for the entire fourth quarter of 2025 but showed a slight uptick from October. The data indicates that while the annual rent growth figures might show modest improvement, the underlying market pressure to attract renters remains intense.
Structural Headwinds: Record Supply Meets Weakening Demand Drivers
The primary driver of this competitive environment is the unprecedented volume of new apartment deliveries, particularly in Sun Belt markets. “High levels of new deliveries—particularly in the Sun Belt—remain a primary structural headwind,” noted Paul Fiorilla, associate director of secondary research at Yardi, in the firm’s February report. Although construction starts have eased from their peak, a large pipeline of units remains in lease-up, absorbing demand slowly.
This supply surge coincides with several demand-weakening trends. The job market is showing signs of softening, domestic migration patterns have slowed from their pandemic-era highs, and immigration outflows have constrained household formation. The result is a national vacancy rate that climbed to a new high of 7.4%. Yardi’s data shows occupancy rates declined year-over-year in 28 of the top 30 markets it tracks.
Expert Analysis: Conditioning Renters to Expect a Deal
“This big wave of supply these last few years has conditioned renters to expect a deal,” said Jay Parsons, a rental housing economist. He explains that concessions, particularly free rent, directly impact a property’s reported income on the rent roll, making them a significant financial consideration for owners. Some landlords may prefer non-rent concessions, like gift cards, which don’t depress the property’s effective rent statistics but still attract tenants.
Parsons offers a historical parallel, comparing the current situation to 2010 when unemployment was significantly higher. “The trouble, again, is massive supply,” he stated, referencing the roughly 1.4 million new units delivered over a three-year period—the highest count since the 1970s. Despite the challenging supply dynamics, Parsons notes that absorption (the rate at which new units are leased) today is far healthier than it was in 2010.
The Outlook: Seasonal Bump or Market Shift?
While rents posted a small monthly gain of 0.2% in February, according to Apartment List, ending a six-month decline, the annual picture remains negative with rents down 1.5% year-over-year. The modest monthly increase is widely viewed as a seasonal rebound, unlikely to reverse the broader trend without a significant reduction in the supply pipeline or a surge in demand.
The combination of high vacancy, elevated concessions, and record-level new inventories suggests landlords will continue to use incentives as a key leasing tool for the foreseeable future. The market’s ability to absorb this supply will depend heavily on employment trends and the pace of new deliveries, which, while slowing, will continue to add pressure throughout 2025.
A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox.
