Dreaming Of Moving Into A Newly Constructed Apartment? Redfin Reports The Shocking Premium For That Privilege As Rents Soar

There’s something magical about moving into a newly constructed home: the smell of recently milled wood, new paint and gleaming tiles – knowing no one has lived there before you. However, like anything in real estate, that privilege comes with a price. According to a recent report from Redfin, asking rents for newly constructed apartments rose 1.5% – the biggest year-over-year increase in 18 months – to a median of $1,802 in the third quarter.

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It’s a surprising stat given that the deluge of newly constructed apartments, primarily in Sunbelt states, caused rents for new apartments to fall by more than 7% in Q1 and Q2. The latest numbers reflect that the newer apartments are now being filled. Redfin based its numbers on an analysis of the U.S. Census Bureau’s data for newly constructed, unfurnished, unsubsidized, privately financed rental apartments in buildings with five or more units. Apartments completed in the second quarter of 2024 and either rented or not rented within three months were used to compile the survey.

The Northeast Stumbles While Everywhere Else Soars

Only the Northeast saw asking rents fall (-3.6%) after the number of recently finished apartments rose 13% year over year in the second quarter to the highest level since the fourth quarter of 2022. The rental decrease could have been due to several reasons – primarily that rents in the Northeast, particularly in places like Boston and New York, were already high, with many residents moving to the Sunbelt states, according to government census data. 

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“We would usually predict that rents will stay flat or even potentially fall when there are so many new apartment buildings opening up. What’s interesting in the third quarter is that rents are rising by more than the national average in the West and Midwest, even after the number of new apartments spiked between 30-50%,” Redfin Senior Economist Sheharyar Bokhari said in the report. “This is likely due to more new apartments being built in more expensive metros in each region, pushing the overall levels up.”

High-End Finishes and Amenities

The competition among new multifamily developments for tenants has led to higher-end finishes and more amenities, even among mid-priced rentals. Comfort, sustainability and catering to the increased number of work-from-home or hybrid working tenants have been at the forefront of developers’ minds.

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“From state-of-the-art fitness facilities to luxurious pools, multifamily developments can bring a unique experience to day-to-day life,” Jared Bradley, president and founder of The Bradley Projects, told multifamilyexecutive.com. “Small pockets of privacy for tenants to complete their work gives residents the feeling of ‘leaving their apartment’ without stepping outside the building,” he added. “The confines of apartments can sometimes feel tight for working from home and areas designated for remote workers can allow tenants to leave their units and work from other comfortable places in their building.”

More Of The Same In 2025

According to a new outlook from Yardi Matrix, rents for new developments will continue to grow in 2025, outstripping other sectors of the multifamily sector. The report stated that a “large number of properties under construction will support robust supply growth again in 2025 … which will push rents higher as the supply boom starts to fade.”

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