Apartment rent growth in Lancaster tops among eight largest cities in Pennsylvania

 By Brenda Nguyen CoStar Analytics

Lancaster, Pennsylvania, has established itself as a thriving apartment rental market over the past decade. Among Pennsylvania's eight largest apartment markets, Lancaster has consistently led the commonwealth in rent growth over the past five years, outpacing the state’s largest cities by wide margins.

Once a quiet county in south central Pennsylvania, Lancaster has continued to see an increase in local residents, including many who have moved from New York City and Philadelphia. The local apartment market had already recorded the lowest vacancy rate of the eight largest Pennsylvania apartment markets, averaging 3.5% in the past decade. In the last three years, vacancy has further compressed to an average of 2.7%.

A lack of apartment options has enabled the market to sustain solid rent growth, averaging an annual increase of 4% over the past decade and 6.3% in the last three years.

Persistently strong annual rent growth has resulted in double-digit rent hikes over the years. In late 2024, Lancaster recorded a 31.5% cumulative rent growth over the past five years, 18.6% in the past three years, and 6.2% in the past 12 months—outpacing the rest of the Keystone State. Lehigh Valley, Scranton and Reading have followed, while the largest cities, Philadelphia and Pittsburgh, have trailed the rest of the state in terms of annualized rent growth.

The rate of increase can be attributed to the region's tight market conditions and increasing demand from local renters.

The region's growing employment base, which has increased by 7.2% in the past three years, has further fueled demand for apartments in the area. This, coupled with the presence of several higher education institutions, such as Franklin & Marshall College, contributes to a vibrant community and steady demand for rental housing.

Lancaster's appeal may have been further enhanced by its recent recognition as a top place to retire. U.S. News & World Report has consistently ranked the region highly for its quality of life, healthcare services and low taxes.

The combination of affordability, small-town charm, and strong employment opportunities has attracted residents, developers, and investors over the years and is expected to attract more in the future.

However, with so little apartment construction underway or in the proposal pipeline, Lancaster’s growing population is expected to face further rent increases in the future.

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