NYC Apartment Vacancy Set to Stay Lowest in the US

New York City’s apartment market continues to outperform most major US metros, even as population trends soften. Marcus & Millichap projects vacancy will edge up to 2.4% in 2026, yet the city is still expected to post the nation’s lowest apartment vacancy. Tight supply, strong tenant retention, and steady investment activity continue to support multifamily fundamentals despite new policy headwinds.

Slower Population Growth Tests Demand

Household formation is expected to weaken this year as roughly 50,000 residents leave New York City, according to Marcus & Millichap’s Q2 2026 market report. That figure matches 2019 levels and would mark only the second decline in household formation over the past two decades. The first occurred during the pandemic.

Even with slower demand growth, leasing fundamentals remain resilient. Renewal rates have hovered near 70% in recent quarters, well above the national average of roughly 55%. Higher tenant retention continues to limit turnover and helps preserve occupancy across much of the market.

The Details

Marcus & Millichap expects apartment vacancy to rise by just 20 basis points this year, reaching 2.4%. That would extend New York City’s streak of maintaining sub-3% vacancy to 11 consecutive years.

Supply remains the primary constraint. The brokerage reports only about 15,000 apartment units are under construction, the lowest development pipeline in a decade. Deliveries are expected to slightly exceed net absorption, but not enough to materially loosen market conditions.

Limited inventory should continue supporting rents. Marcus & Millichap forecasts average effective rents will climb 2.1% in 2026 to approximately $3,198 per month.

Rent Regulations Reshape Investment Strategy

A new rent freeze adds another variable for owners and investors. The Rent Guidelines Board approved a freeze for roughly one million tenants living in rent-stabilized apartments whose lease renewals fall between Oct. 1, 2026, and Sept. 30, 2027.

Marcus & Millichap notes that operating expenses may continue rising even as rental income remains flat for stabilized properties. That dynamic could shift investor demand toward newer market-rate assets, where owners have greater pricing flexibility and fewer regulatory constraints.

The policy creates a wider performance gap between stabilized and market-rate multifamily properties, especially as operating costs remain elevated.

Why It Matters

Few apartment markets combine such low vacancy with limited construction. According to Marcus & Millichap, New York City’s development pipeline remains historically constrained, allowing landlords to maintain pricing power despite softer population growth.

Capital markets reflect that strength. Multifamily transaction volume increased 20% during the year ending in March, according to the brokerage. Activity expanded across all five boroughs, although Manhattan posted more modest gains because higher pricing continues to challenge acquisitions.

For investors, the market’s long-term supply imbalance continues to outweigh near-term demographic concerns.

What’s Next

The biggest question for the remainder of 2026 is whether new supply remains limited enough to offset weaker household formation. Marcus & Millichap expects deliveries to exceed absorption only modestly, suggesting vacancy should remain exceptionally low by national standards.

Investors will also watch how the rent freeze affects acquisition strategies. Capital may continue rotating toward market-rate communities if revenue growth becomes more constrained for stabilized assets. Even with those shifts, New York City’s multifamily market appears positioned to remain one of the country’s strongest through the end of the year.