These are the most competitive apartment markets

With lease renewal rates consistently high and many potential homebuyers still locked in, the apartment market is getting more competitive in many markets around the nation.

That's according to a recent analysis by real estate market insight company RentCafe, which provides a competitiveness score that includes occupancy rates, lease renewals and number of prospective renters, among other factors.

The national rental competitiveness average is at 75.8 points, up from 74.2 last summer.

The multifamily market softened this last year on the heels of record new apartment construction. The national occupancy rate dropped to 93.7% this season from 94% last year.

Vacant apartments typically stayed on the market for two days longer for an overall average of 39 days. There were also slightly fewer renters — nine as opposed to ten — for each residential unit this summer. But 62% of renters renewed this season compared to 60.5% during the same period in 2023.

But despite a recent slowdown in the national apartment market, median monthly rent across the U.S. this spring was still just $33 less than what it was at market's peak in August 2022, according to Realtor.com. It also was $316 higher (22.5%) than what it was at the same time in 2019.

Midwest heat up as Sunshine State fades

Rental units in Manhattan and Brooklyn, New York have long commanded top dollar. But with space at a premium — Manhattan’s share of new units was only 0.05% — that trend could soften over time. Enter the Midwest, which is currently hot on the heels of the Northeast in terms of competition for apartment units.

The Midwest also ranked highly for competitiveness. Nowhere is that phenomenon more evident than in suburban Chicago, now tied with top-tier Miami, which has recently been the dominant domestic rental market.

Communities such as Naperville, Schaumburg, Oak Brook and Evanston, Illinois report fierce competition. Units attract 16 renters on average. The situation is further exacerbated by an increase in renewal rates — now 69.5%, up from 67.3% this time last year.

Meanwhile in Miami, competitiveness metrics have contracted in all categories as Florida saw an unprecedented level of new construction. According to RentCafe, supply has grown 1.02% in recent months, but that’s still less than half of the new units that entered the market during the same time last year.

While Miami renewal rates are still above the national average, at 71.5%, they are down from 73% last summer. Less than 4% of Miami’s units are available and filled within 32 days, but there are now only 18 applicants per available unit, compared to 25 applicants in 2023.

Competition growing in affordable markets

With a gain of 13.7 points on its competitiveness score, Louisville, Kentucky, led the pack. An affordable cost-of-living combined with employment opportunities at three Fortune 500 companies make the community an attractive destination.

Similarly, Sacramento, California, posted a 12.9-point gain compared to a year ago. With cost-of-living 13% lower than the state average, Sacramento is a more affordable option compared to the Bay Area and Los Angeles, and developers are racing to keep pace.

The RentCafe report also spotlights the increased competition in smaller markets not far from major metro areas.

Macon and Athens, Georgia, both less than 100 miles from blockbuster Atlanta, gained 12.2 and 10.3 points, respectively.