Phoenix apartment rent growth finished 2025 in negative territory for third straight year

Article originally posted on CoStar on January 7, 2026

The average asking rent for Phoenix apartment properties fell 3% in 2025, the largest annual decrease since the Great Recession.

Last year’s decline comes on the heels of underwhelming performance in both 2023 and 2024, which each saw losses of between 1% and 1.5%. Asking rents are now cumulatively down about 7% from the all-time peak in mid-2022.

Persistent supply pressure remains the primary culprit for softening operations. The Valley has been contending with the largest completion schedule since the 1980s. While underlying demand drivers, such as population and economic growth, remain healthy, they have not been sufficient to adequately absorb the supply surge.

More than 20,000 net new apartment units were completed in 2025, building on 2024’s completion total of about 26,000 units. For comparison, an average of approximately 7,100 units were built per year from 2015 to 2019.

Increased competition from new supply caused stabilized occupancy to fall in 2025, reaching the mid-90% range by year-end. That marks a deterioration from 2023 and 2024, which saw stabilized occupancy remaining in the high-91% to low-92% range.

Though rent growth was firmly negative across the quality spectrum, middle-priced apartments notched the largest decrease. The average asking rent for three-star properties declined by 3.4% in 2025, more than double the roughly 1.5% decrease the segment experienced in 2024.

Meanwhile, the luxury four-and-five-star subsector recorded a 2.9% rent decrease, and rents at lower-tier one-and-two-star complexes retreated 2.3%.

Moving forward, the pace of completions is expected to ease this year, providing Valley operators with some supply-side relief. Nevertheless, the accumulation of excess inventory during the construction boom years could make a return to positive rent growth challenging in 2026, with current forecasts indicating a modest annual decline by year-end.