MARKET SNAPSHOT
Development activity in the Metroplex, measured by total units under construction, has significantly declined from 65,000 units in the second quarter of 2023 to approximately 36,000 units as of early January 2025. This figure aligns closely with the pre-pandemic average observed from 2015 to 2019. Currently, these 36,000 units account for 4.0% of the region’s inventory—higher than the national average of 3.3% but below other Sun Belt markets like Phoenix, where 6.5% of inventory is under construction.
Northern suburban areas remain at the forefront of construction activity, driven by the region’s ongoing demographic and economic expansion. Among these, the Frisco/Prosper area stands out for maintaining steady construction starts over the past year, bucking broader market trends. This stability reflects strong population growth and continued in-migration to northern Collin and Denton counties. These counties have been instrumental to North Texas’s growth, each experiencing a 50% population increase since 2010 and surpassing the one-million-resident mark within the last three years.
While many peer markets are expected to face pronounced supply-side pressures through 2025, Dallas-Fort Worth is comparatively well-positioned for a faster recovery. Unlike Austin and Phoenix, where new supply has recently placed greater downward pressure on rent growth, the Metroplex benefits from tapering construction levels. The rising cost of construction financing and subdued rent growth over the past two years contributed to a nearly 50% decline in construction starts in 2024, with only 18,400 units breaking ground—a figure approximately 10,000 units below the 10-year historical average. As construction slows and demand stabilizes, the region is poised for quicker improvements in occupancies and rent growth relative to other Sun Belt markets.
Multifamily demand in Dallas-Fort Worth has increased significantly over the past year, with 30,000 units absorbed—well above the pre-pandemic average of 20,000 units reported from 2015 to 2019. Rebounding consumer confidence and stabilizing inflation have supported household formation, driving this rise in demand. However, despite stronger demand, surging completions have outpaced the rate at which renters can absorb new units. Builders delivered 40,000 units in the past year, nearly double the pre-pandemic annual average of 21,000 units. This oversupply pushed the occupancy rate down to approximately 91.3% in the fourth quarter of 2024, representing a 40-basis-point decline year-over-year.
The sharpest decline in occupancy was seen in the high-end property segment, where average occupancy fell 80 basis points to 88.8% in the fourth quarter of 2024. Mid-tier properties saw a contraction of 40 basis points, with occupancy dropping to 91.2%. Workforce housing demonstrated the highest resilience, recording a 91.6% occupancy rate and experiencing the shallowest decline of 20 basis points.
Dallas-Fort Worth’s long-term structural drivers including population growth, in-migration, and a relatively stable labor market—remain intact, positioning the market to weather periods of uncertainty. Between 2022 and 2023, the metro led the nation in population growth, adding 153,000 new residents, surpassing its decade average of 133,000. This continued growth and in-migration are expected to sustain housing demand in the region in 2025. Even so, 36,000 units remain under construction, with half slated for delivery in 2025. As a result, the occupancy rate is projected to contract modestly again this year, declining by 20 basis points. However, the sharp decline in construction starts in 2024 could lead to a more supply-constrained market by next year, setting the stage for occupancy rates to rebound in 2026.
Rent growth in Dallas-Fort Worth remained negative over the past year, declining by 1.5% as surging supply heightened competition among property operators, bringing average rents down to $1,517. Higher-end properties were particularly impacted, with rents ending 2024 below 2023 levels due to the addition of 32,000 Class A units. This influx of supply exerted significant downward pressure on the high-end segment, where rents fell 1.8% in the fourth quarter to $1,737. Mid-tier properties also experienced a decline, with rents dropping 1.6% to $1,330, the first recorded decrease in this segment since 2010. Traditionally more insulated from supply-driven competition, mid-tier properties have faced added pressure this cycle as rising concessions lured more affluent renters away. Concessions are now offered at over 40% of properties, particularly in newer, high-end properties, the highest level recorded since 2020—with typical incentives ranging from six to eight weeks of free rent. Additionally, cost-sensitive renters seeking more affordable housing options also contributed to the recent challenges in the mid-tier segment, as these renters filter down to lower quality units as the linger effects of inflation continue to squeeze lower wage earners. While rents fell in the mid- and high-tier segments, the workforce housing tier demonstrated resilience, with rents increasing by 1.1% year-over-year to $1,169. This growth reflects the filtering effect as renters adjusted to the evolving cost landscape across the Metroplex.
Despite the challenges of 2024, the rent growth outlook for 2025 is more favorable. Strong demand across the region, combined with a significant reduction in construction activity—projected to deliver only half the volume of new units seen in 2024—supports this positive forecast. While rent growth is expected to remain negative through the first half of 2025 as the market absorbs surplus inventory, conditions are anticipated to improve in the latter half of the year. By the fourth quarter of 2025, rents across all property segments in Dallas-Fort Worth are forecasted to rise 1.5% year-over-year, approximately 120 basis points below the national benchmark increase of 2.7%.
12-month period ending November 2024
The 2025 outlook for the Dallas-Fort Worth metropolitan area remains strong, underpinned by robust economic and demographic growth. According to MMG’s 2024 Employment Expansion Trend Report, the region is expected to see long-term, broad-based growth across corporate activity, tech startups, and professional services, expanding the employment base by 5% over the next five years. This sustained growth solidifies DFW’s position as a thriving economic hub and supports ongoing multifamily housing demand.
Fort Worth is experiencing transformative investments, including multibillion-dollar modernization projects at DFW International Airport and the Dallas Convention Center. Additionally, significant investments from financial giants like Wells Fargo and Goldman Sachs are reinforcing the region’s status as a global finance hub.
Looking ahead, steady housing demand and a slowdown in new construction are expected to stabilize occupancy rates and return rent growth to positive territory for the first time in over two years. By the end of 2025, rents are projected to increase by 1.5%, underscoring DFW’s resilience and position as one of the top three markets for multifamily investment.
