U.S. 2025 Short-Term Rental Market Poised for Stabilized Growth

• The U.S. short-term rental (STR) industry is expected to rebound to pre-pandemic levels by 2025, with a forecasted occupancy rate of 54.9%.
• 2024 marked a pivotal year for the STR market, with a slowdown in new supply and increased demand leading to the first Revenue per Available Room (RevPAR) gains since 2021.

AirDNA, a leading provider of short-term rental data and analytics, has released its 2025 Outlook Report, predicting a stabilized growth for the U.S. short-term rental (STR) industry. According to the report, the STR market is expected to recover to pre-pandemic occupancy levels of 54.9% by the end of 2025. This recovery is anticipated to be driven by sustained growth in demand and a slowdown in adding new supply.

The year 2024 proved to be a turning point for the U.S. STR market after two years of declining performance at the unit level. Supply growth, which reached a peak of 22.3% year-over-year (YOY) in 2022, slowed down significantly to 6.9% in 2024. This slowdown was attributed to high interest rates and housing prices discouraging new listings. Conversely, demand saw a surge of 7.0% YOY, fuelled by a backlog of traveler interest and a stabilizing economic environment.

“2024 provided a much-needed respite for the market,” noted Bram Gallagher, PhD Economist at AirDNA. “This rebalancing not only arrested the decline in occupancy but also led to the first Revenue per Available Room (RevPAR) gains since 2021 (3.4%), creating better market conditions for STR operators. This gave them a less competitive landscape and an opportunity to enhance performance.”

Looking ahead to 2025, the U.S. STR market is projected to build on the momentum gained in 2024, with incremental improvements in occupancy and revenue expected through 2026. Supported by rising real incomes and steady economic conditions, demand is forecasted to increase by 4.9% in 2025, outpacing the supply growth, which is expected to further slow to 4.7%.

On a more detailed level, small and rural markets, which experienced considerable growth during the pandemic, are expected to stabilize in 2025 as demand plateaus and supply aligns more closely with pre-pandemic trends. Urban markets are set to see gains in occupancy and RevPAR as new listings and regulatory constraints limit supply growth, particularly in cities such as New York, Washington, D.C., San Francisco, and Atlanta.

For investors, the report highlights that despite potentially remaining high interest rates, stronger cash flow, steady home value appreciation, and predictable market conditions provide solid opportunities for long-term returns. Jamie Lane, SVP of Economics at AirDNA, emphasized that “2025 will be a dynamic year for growth. As the market matures, the winners will be those who leverage precise, data-driven insights to adapt to shifting trends and capitalize on the strongest opportunities.”

Discover more at AirDNA.