Multifamily Recovery Signals 2026 Market Stabilization

US multifamily rent growth stalled in 2025, averaging just 0.2% nationally.
Supply peaked in 2024 and declined 20% in 2025; further slowdown is expected in 2026.
Vacancy rates remain elevated at 8.5%, but decreased construction may spur gradual recovery next year.
Regional differences persist, with Midwest and Northeast outperforming oversupplied Sun Belt markets.

Key Takeaways

Multifamily Recovery in Sight

CoStar reports that the US multifamily market heads into 2026 after a year marked by weak rent growth and high vacancy. New apartment supply continued to outpace demand throughout 2025, causing national rents to effectively flatline and vacancy to reach 8.5% by year-end. However, with completions stepping down from 2024’s peak, conditions are poised for gradual recovery.

Construction activity dropped by about 20% in 2025 compared to the previous year, and the pipeline is set to slow further in 2026. Should economic fundamentals remain stable and renter confidence hold, the sector may see incremental rent gains as new supply ebbs.

What to Watch in 2026

As the rate of new multifamily deliveries declines, the key question for 2026 is whether sustained demand can absorb the surplus and bring vacancy down. Market observers expect that if absorption outpaces new supply, vacancies will decline and rent growth could resume, particularly in the latter half of the year.

Asset quality also shapes the outlook. In 2025, three-star properties outperformed at 0.3% rent growth, while top-tier assets lost ground. With supply pressure easing, premium units may rebound and surpass mid-tier rent gains in 2026.

Regional Performance Remains Mixed

Performance across US multifamily markets remains highly regional. San Francisco and Chicago saw strong rent growth in 2025. In contrast, Sun Belt metros like Dallas-Fort Worth and Phoenix struggled due to oversupply. An upward revision in national multifamily supply forecasts during 2025 exacerbated this imbalance, intensifying pressure on already saturated markets. Looking ahead, markets with limited new construction and solid demand are best positioned to recover. Meanwhile, overbuilt regions may continue to face headwinds. San Francisco is expected to remain a rent growth leader in 2026.

The multifamily recovery will hinge on local supply, labor markets, and broader economic trends. As a result, 2026 will be a pivotal year for owners and investors in the sector.