AirDNA, a provider of short-term rental (STR) analytics, has released its 2025 Outlook Report, predicting steady growth and stabilization for the U.S. short-term rental market. After a period of turbulence, occupancy rates are forecasted to return to pre-pandemic levels, reaching 54.9% by the end of 2025. This recovery will be fueled by sustained demand growth and a marked slowdown in new supply.
“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,” said Jamie Lane, SVP of Economics at AirDNA.
2024: A Year of Recovery and Rebalancing
The U.S. STR market experienced a pivotal rebound in 2024 after two challenging years of declining unit-level performance. Supply growth, which had soared to 22.3% year-over-year (YOY) in 2022, cooled significantly, dropping to just 6.9% in 2024 due to high interest rates and elevated housing prices, which deterred new listings.
Simultaneously, demand surged by 7% year-over-year, driven by pent-up traveler interest, and improving economic stability. This rebalancing of supply and demand ended a streak of declining occupancy rates, enabling the first Revenue per Available Room (RevPAR) gains since 2021. RevPAR improved by 3.4% in 2024, providing a more favorable environment for STR operators to strengthen their market positions.
“2024 gave the market a much-needed breather,” said Bram Gallagher, Ph.D., Economist at AirDNA. “This rebalancing not only stabilised occupancy but also drove the first Revenue per Available Room (RevPAR) gains since 2021 (3.4%), improving market conditions for STR operators with a more manageable competitive landscape and an opportunity to strengthen performance.”
Forecast for 2025
Building on 2024’s momentum, the STR industry is poised for continued growth in 2025 and beyond. Demand is projected to rise by 4.9%, outpacing a modest 4.7% increase in supply. RevPAR is expected to grow by 2.9%, supported by higher real incomes and steady economic conditions.
Urban markets are forecasted to see notable gains, with cities like New York, Washington, D.C., San Francisco, and Atlanta benefiting from regulatory constraints that limit supply growth. Conversely, small and rural markets, which boomed during the pandemic, are anticipated to stabilize as demand levels out to align more with pre-pandemic trends.
Larger, group-friendly properties will continue to drive Average Daily Rate (ADR) growth, contributing to revenue increases across diverse market types. For investors, 2025 offers a promising landscape despite high interest rates, with opportunities for strong cash flow and long-term returns.
“2025 will be a dynamic year for growth,” Lane emphasized. “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.”
Click here for more on AirDNA’s 2025 U.S. Short-Term Rental Outlook Report.
