H1 2025 Huntsville Multifamily Market Report

Market Overview

Huntsville, AL, known as “The Rocket City,” remains one of the Southeast’s fastest-growing metros, thanks to a broadening and increasingly diverse population base. Driven by a strong economy, a resilient job market, and an exceptional quality of life, Huntsville continues to attract a broad spectrum of residents, from young professionals to retirees. Its dynamic blend of technology, defense, and manufacturing industries positions the market as a regional economic hub. Huntsville has now overtaken Birmingham as the largest city in Alabama, after adding about 13,600 people in 2024 As of Q2 2025, total employment in the Huntsville metro reached 292,200, with an unemployment rate of 2.3%, below the national average of 3.9%, and in line with a decade of steady 2% annual job growth, according to the HSV Economic Market Report.

 

Accolades

• Huntsville ranks among the “5 Best Cities for Renters to Live in for 2025, climbing from #15 in 2024, according to Rent Café’s annual report.
• U.S. News & World Report names Huntsville as #7 Best Places to Live in the U.S. in 2025.
• Nationally ranked as the fourth best city for millennials, according to Commercial Cafe.

 

Key Findings

• Construction and deliveries remain elevated, as +/- 4,300 units have delivered over the past 12 months. This is seen as a short-term supply & demand imbalance; as starts continue to fall and absorption remains elevated, the market will eventually hit an equilibrium.
• Madison/Airport, Limestone County, and University/Research Park submarkets have seen the highest demand over the past 12 months and have also absorbed the bulk of new multifamily inventory. While Limestone County and Outlying Madison currently report the highest vacancy rates, the Southwest submarket maintains the lowest.
• Affordability remains a key advantage in Huntsville. Class A rents average $1,430/month, about 35% below the national average. As new supply hitting the market has remained elevated, this has compressed rents due to the above average lease-up competition and concessions being given.

 

By The Numbers

• Vacancy Rate: 18.2%
• Rent Growth: -3.3%
• Market Asking Rent Per Unit: $1,268
• Units Under Construction: 1,745
• Units Absorbed: 954
• Units Delivered: 876
• Cap Rate: 6.1%
• Sales Volume: $61.4M
• Average Sales Price Per Unit: $161K | Q2 2025 | Source: CoStar Group Inc.

 

Huntsville Demographics

• Unemployment Rate: 2.3%
• Current Population: 547,347
• Households: 221,144
• Household Median Income: $88,179

 

 

Employee Growth (2000-Current)

Source: Huntsville Madison County Chamber

 

Construction

In Huntsville, AL, record construction activity has saturated the multifamily market, pushing vacancy levels to historic highs despite strong demand. The city added more housing units in 2024 than in any year since record keeping began in 1983, marking the third consecutive year of record-breaking housing deliveries, primarily driven by projects that started construction between 2020 and 2022. While vacancy has declined from a late-2024 peak of 19.6%, it still stands at an elevated 18.2%, well above the market’s 10-year average of 10.1%.

 

These high vacancies are not demand-driven—Huntsville absorbed over 4,200 units in the past 12 months, far exceeding its historical average of 1,600 units annually. However, the market also saw 6,300 new units delivered in that time, contributing to a broader surge of over 16,000 units delivered in the past three years. Apartment units granted Certificates of Occupancy (COs) increased by 51% year-over-year, adding further near-term pressure on lease up velocity. Ultimately resulting in a hyper-supplied, competitive market for the foreseeable future.

 

As leasing competition intensifies, developers are pulling back. Construction starts have plummeted, and the development pipeline continues to contract. There are now only approximately 1,470 units under construction, down by approximately 74% from the same time last year. As absorption rates remain strong and starts/deliveries continue to fall, the market is expected to rebound. The outlook for the Huntsville market remains highly positive when considering the current pipeline and projected conditions in 2027 and 2028.

 

Huntsville Multifamily Supply and Demand Dynamics

Source: CoStar Group Inc.

 

 

Construction Starts (Units)

Source: CoStar Group Inc.

 

Multifamily Developments Under Construction (As of 12/31/2024)

 

 

 

Build-to-Rent (BTR) and Single-Family Rental (SFR) Construction

Huntsville has become one of the leading markets for BTR and SFR development, driven by strong demographic growth, a resilient and diversified economy, and evolving lifestyle preferences. With rising home prices and increasing financial pressures, Millennials and Gen Z are leaning more toward renting than homeownership.

 

Purpose-built BTR communities are especially attractive to young families and remote workers, offering the space of a single-family home with the flexibility, mobility, and modern amenities today’s renters are looking for.

 

Huntsville also ranks 7th nationally in BTR completions for 2024, and 10th for units underway heading into 2025, with 2,005 BTR units in progress. In total, the metro has recorded 11,773 apartment starts over the past five years, reflecting the scale of development that has shaped today’s competitive leasing environment.

 

BTR Units Completed in 2024

 

 

Top 20 Metros with Most BTR Units in the Pipeline

 

Multifamily Developments Under Construction As of (12/31/2024)

Source: City of Huntsville

 

Sales

Huntsville’s multifamily market saw about $109 million in sales over the past year. This is a 51% drop from the 10-year average of $226 million. Transaction volume slowed in 2025 with just two deals through Q2. These two deals totaled $11.2 million. In contrast, 2024 saw eight deals totaling $91.2 million. Almost 80% of that volume ($72.6M) occurred in Q4 2024. Despite fewer deals, average transaction size increased. Sales in 2025 averaged 119 units per deal. In 2024, the average was 77 units per deal. This points to a shift toward larger, more efficient trades.

 

However, pricing has softened from a price-per-unit perspective, with Median price per unit dropping nearly 20% year-over-year. The positive is cap rates have compressed from 7.5% to 6.0%, signaling a shift from in-place yield to more basis driven investment decisions. While smaller, sub-$5 million transactions still dominate the landscape—the average deal in the past year was $10 million at $115,273 per unit—the broader slowdown suggests capital remains selective and value-conscious in today’s supply-heavy environment. If the H1 2025 trend continues, total sales volume for the year could end 87% below 2024.

 

2024 vs H1 2025 Huntsville Sales Comparison

Concluding Statement

Huntsville’s multifamily market is entering a period of transition as it moves toward greater balance in 2025. This pullback reflects both elevated vacancy rates and tighter development conditions, signaling a cooling construction pipeline heading into the second half of 2025 and 2026. Huntsville recorded net absorption of over 4,700 units in the past 12 months, supported by strong economic and demographic trends. Since 2020, the metro’s population has grown 14%, and employment has surged 60% since 2000—outpacing national averages on both fronts. Unemployment remains well below the national rate, further reinforcing the strength of Huntsville’s labor market.

 

Although top-tier product is experiencing pressure from rent stagnation and heightened concessions, strong absorption and declining starts are positioning the market for recovery. Investment sales have also begun to show signs of stabilization after a sharp decline in 2024, and there is cautious optimism that volumes may improve as confidence returns and fundamentals normalize.

 

At the macro level, volatility in the 10-Year Treasury yield, ongoing geopolitical uncertainties, and tight capital markets continue to influence underwriting standards and investment strategy. Lenders remain conservative, focusing on lower-leverage deals and proven operators, while developers contend with high construction costs and limited access to financing. In this context, investors are increasingly prioritizing stabilized, cash-flowing assets, and delaying speculative or value-add plays until there is greater clarity around interest rates and inflationary pressures.

 

With the delivery cycle moderating and demand drivers firmly in place, Huntsville is on track to close the gap between supply and demand by the second half of 2026 and into 2027. This positions the market for a healthier and more stable multifamily environment, underpinned by strong economic fundamentals, population growth, and a resilient labor market.