Supply and demand dynamics have long played a critical role in shaping rental market performance across the U.S. Following the post-pandemic construction boom, this balance skewed negative in most metropolitan areas, as new supply significantly outpaced renter demand—leading to softening fundamentals in many markets. Recently, however, as development activity slows across much of the country, conditions have begun to improve. Several markets are now seeing renter demand exceed new supply, though others continue to trail. Notably, the share of markets with greater renter demand than new completions has risen sharply from the cycle low in 2023.
Of the 387 metropolitan areas nationwide, 16% recorded significantly more net absorption than deliveries over the four trailing quarters ending in Q1 2025—defined as a margin exceeding 1% of the market’s base inventory. This represents a notable increase from 10% in Q1 2024 and 6% in Q1 2023, though it remains well below the highs seen in the first quarters of 2021 and 2022, when 30% to 55% of markets posted a significant positive variance. Additionally, 55% of markets in Q1 2025 reported a balanced annual supply-demand variance (within ±1% of inventory), marking the highest proportion of balanced markets in the past four years—and nearly double the share observed in 2023.
Conversely, just under one-third of markets in the most recent quarter faced unfavorable supply-demand dynamics over the trailing 12 months, with deliveries significantly outpacing absorption. While this reflects a meaningful improvement from 63% in Q1 2023 and 43% in Q1 2024, it remains elevated compared to the lows of approximately 10% to 20% observed during the same period in 2021 and 2022. That said, most of these markets experienced only modest imbalances, with variances between 1% and 2% of inventory. Only 14 markets recorded negative imbalances greater than 5%, highlighting a relatively limited number of areas still facing significant oversupply.
Markets with substantial negative supply-demand imbalances are at a clear disadvantage, typically posting below-average rent growth and occupancy. In contrast, metros where absorption outpaces deliveries are outperforming—supported by strong population growth and limited new development. Together, these factors position them as leading candidates among emerging housing markets.
Identifying markets with the most favorable and unfavorable supply-demand dynamics provides valuable insight into where the best investment opportunities may exist—and which regions may warrant caution. This analysis highlights the 20 markets with the largest positive and negative imbalances nationwide to help guide strategic investment decisions.
Of the top 10 metro areas for favorable supply-demand dynamics—where absorption significantly outpaced deliveries over the trailing 12 months—six were concentrated in the Southeastern U.S., followed by two each in the Mid-Atlantic and Mountain West regions. Notably, both leading Mid-Atlantic markets are metro areas located just outside Washington, D.C.
Topping the list were two Florida markets—Punta Gorda and Sebastian–Vero Beach—where net absorption exceeded new deliveries by more than 10% of existing inventory, a metric that standardizes comparisons across markets of varying sizes. Close behind was New Bern, NC, with a 9% positive imbalance, followed by Great Falls, MT; Cheyenne, WY; Rome, GA; and Prescott, AZ, each recording margins of 6%. Rounding out the top 10 were Chambersburg–Waynesboro, PA; Winchester, VA; and Port St. Lucie, FL, where absorption outpaced new supply by 5%.
Although Punta Gorda and Sebastian–Vero Beach lead the rankings, their positions may be challenged due to sizable construction pipelines, each equal to around 20% of base inventory—well above the 4% national benchmark. Similar concerns apply to Rome, GA and Prescott, AZ, where pipelines are expected to expand inventory by 13% and 18%, respectively. Rome faces added pressure from both a large pipeline and subpar occupancy (89%).
In contrast, Winchester, VA appears more balanced, with a moderate level of construction activity, above-average occupancy (97%), and 1.0% annual population growth. The remaining top-performing markets generally have limited new supply, strong occupancy, and steady demographic growth—positioning them well to sustain renter demand. Port St. Lucie, FL stands out with 1.5% annual population growth, a construction pipeline at just 4% of existing inventory, and a stabilized occupancy rate of 93%, slightly below the cohort average of 94%.
On the opposite end of the spectrum, several markets recorded the most severe negative supply-demand imbalances over the past year. The Villages, FL led with a -19% margin, followed by Sherman–Denison, TX (-18%) and Wenatchee, WA (-16%). Other notably impacted markets included Jacksonville, NC and Myrtle Beach, SC on the Atlantic coast, as well as Idaho Falls, ID and Santa Fe, NM in the Mountain West—each with imbalances ranging from 10% to 11%. Additional underperformers included Dalton, GA; Ocala, FL; and Ft. Walton Beach, FL.
The Villages not only posted the steepest imbalance but also had an occupancy rate of just 85%, low even among this underperforming group, along with a construction pipeline equal to 13% of existing inventory. On average, these ten markets reported an occupancy rate of 89.6% and remain far less competitive than top-performing metros, as new supply continues to exceed demand, increasing the risk of further imbalance.
The data highlights a clear trend: metros with strong renter demand, limited new construction, and steady population growth are outperforming and offer the greatest investment potential. Port St. Lucie, FL and Winchester, VA lead the way, combining positive supply-demand imbalances with healthy occupancy and favorable demographic trends.
Port St. Lucie stands out with one of the highest population growth rates and a 93% occupancy rate, aligning closely with the national benchmark. Winchester similarly benefits from above-average occupancy, steady demand, and a manageable development pipeline, positioning both markets as strong candidates for long-term multifamily investment. Smaller metros like New Bern, NC and Great Falls, MT also show promise due to limited new supply and solid absorption. While Florida markets such as Punta Gorda and Sebastian–Vero Beach may face future supply challenges, their current demand strength justifies continued investor interest.
Ultimately, the most resilient opportunities are found in markets where demand exceeds supply, growth trends are sustained, and development remains disciplined—offering both short-term stability and long-term upside.
Port St. Lucie, Florida, is known for its rapid growth, offering a suburban lifestyle with more affordable housing compared to South Florida’s major metros. It has become a magnet for young families, retirees, and remote workers seeking a quieter, community-driven environment. The city is also recognized for its strong sports presence, serving as the spring training home of the New York Mets and hosting the renowned PGA Village golf resort. Outdoor recreation is abundant, with nearby Atlantic beaches, extensive parks, and eco-tourism spots like the Port St. Lucie Botanical Gardens and Savannas Preserve State Park.
In addition to its recreational appeal, Port St. Lucie is experiencing significant economic development, particularly in the healthcare, education, and light manufacturing sectors. Ongoing investments in infrastructure and new communities, such as the Tradition area, are helping the city balance growth with quality of life. With its low crime rates, good schools, and access to nature, Port St. Lucie offers both immediate lifestyle benefits and long-term potential for residents and investors alike.
Annual net absorption remains strong in Port St. Lucie, with nearly 1,600 units occupied over the past year—well above the five-year average of approximately 1,000 units—marking one of the highest demand levels on record. This surge has helped push stabilized occupancy up by 100 basis points from the 2023 low of 92%. With most new inventory already delivered, and construction starts remaining muted, supply pressures are expected to ease further. Currently, just 640 units are under construction, compared to 1,230 units underway a year prior, with no major deliveries scheduled until late 2026.
Solid inbound demand, particularly from Palm Beach County commuters seeking more affordable housing, continues to support the market. Rents in Port St. Lucie are about 20% lower than those in Palm Beach, helping drive ongoing absorption and positioning occupancy to likely rise above 93% by early 2026. Although average rent growth has moderated from recent highs—slowing from a record 15% in 2021 to 5.8% as of Q1 2025—it remains well above the national benchmark of 1.2% and outpaces most regional peer markets.
15,619
$1,984 UP 5.8% YoY
93.0%
868 UNITS
1,578 UNITS
637 4.1% OF BASE INVENTORY
Winchester is a historically rich city located in the scenic Shenandoah Valley, best known for its deep ties to the Civil War and its well-preserved colonial heritage. The city’s Old Town district offers a vibrant blend of historic architecture, local shops, and cultural landmarks like the Museum of the Shenandoah Valley and George Washington’s Office Museum. One of Winchester’s most celebrated traditions is the annual Shenandoah Apple Blossom Festival, which draws crowds from across the region with parades, live entertainment, and a strong sense of community.
Beyond its history, Winchester offers natural beauty and outdoor recreation, with easy access to the Blue Ridge Mountains, Shenandoah National Park, and popular hiking destinations like Skyline Drive. The city is also experiencing steady growth, attracting new residents with its affordable housing, commuter access to the Washington, D.C. metro area, and strong local employers such as Shenandoah University and Valley Health. This blend of cultural heritage, natural amenities, and economic opportunity makes Winchester an increasingly desirable place to live, work, and visit.
With no new supply delivered over the past year and steady positive demand, Winchester’s apartment market has outperformed both regional and national trends. The occupancy rate stands at 96.9%, slightly above its long-term average of 95.8% and well above the national average. In contrast, nearby metros like Charlottesville and Richmond report occupancy closer to 93% as of Q1 2025.
Development has slowed sharply, with 2024 marking the first year in a decade without any multifamily completions. Only one 192-unit project is scheduled for delivery in 2025—reflecting a 60% decline from the 2023 peak—and no new construction starts have occurred since mid-2022. With limited new supply and steady demand, Winchester should remain insulated from supply pressures. Lower competition has favored landlords, boosting annual rent growth to 4.3%, about 60 basis points above the historical average and more than triple the national benchmark (1.2%). At an average rent of $1,489, Winchester remains highly affordable, offering a 35% discount compared to the Washington, D.C. metro.
4,441
$1,489 UP 4.3% YoY
96.9% UP 90 BPS YoY
0 UNITS
204 UNITS
192 4.3% OF BASE INVENTORY
Sources: CoStar, ESRI, BLS
