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The U.S. residential rental scene is becoming a tale of two markets.
The national vacancy rate for rented housing units rose by 20 basis points year over year to 7.1 percent in the third quarter, led by increases in the southern and western parts of the country. Meanwhile, the Midwest and Northeast regions recorded drops in their vacancy rates, according to recently released data from the U.S. Census Bureau.
The U.S.’s rental vacancy rate has been at or above 7 percent in each of 2025’s quarters so far; it had not been at this level since the first quarter of 2019.
The South had the highest third-quarter vacancy rate of 9.1 percent, an annual increase of 60 basis points — the greatest spike among the regions. That was the highest rate the South has seen since the first quarter of 2019.
Following the South was the West, which recorded a vacancy rate of 6 percent, up from 5.7 percent last year. The West’s rate of 6 percent was the region’s highest since 2017.
In contrast, the Northeast had the lowest vacancy rate in the third quarter, at 5 percent, down from 5.4 percent last year. But the Midwest’s vacancy rate had fallen the most year over year, by 50 basis points, to reach 6.4 percent in the third quarter.
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The South also had the highest vacancy rate for owned homes, coming in at 1.4 percent in the third quarter. That was flat from the same quarter last year.
The region with the lowest homeowner vacancy rate in the third quarter was the Midwest. Its rate of 0.9 percent was 20 basis points higher year over year.
The Sunbelt has seen a boom in population and residential construction over the past decade that accelerated during the pandemic. Now, certain pockets of the region and sectors are grappling with oversupply issues. Austin, for instance, has seen home-selling and mortgage activity fall, and developers have largely pulled back on building more apartment complexes in the Texan capital region. The Midwest, on the other hand, has started to see more interest from builders and those looking to move to the region for job opportunities, better cost of living and more space. Over the summer, it was the lone region to see an increase in new residential construction.