For the data behind the commentary, download the full Q2 2026 U.S. Multifamily Report.
Demand Reaccelerated in the Second Quarter
Multifamily demand strengthened in the second quarter, with net absorption totaling 124,600 units, up from 83,500 units in the first quarter and 8% above Q2 2025. The quarter marked the strongest demand total since mid-2024 and brings year-to-date absorption to 208,000 units, in line with last year’s 210,000 units. This strength is particularly notable given the macroeconomic backdrop: Job growth remains positive but subdued, immigration has slowed sharply, and population growth has moderated. Even so, renter household formation continues to outperform what those indicators alone would predict, underscoring the resilience of apartment demand.
Demand momentum translated directly into occupancy gains. National vacancy fell to 8.9%, down roughly 35 bps QOQ, the first meaningful decline after more than a year of stability. On a trailing four-quarter basis, absorption of roughly 362,000 units exceeded deliveries (approximately 358,000 units) for the first time since early 2022. The vacancy rate appears to have reached its cyclical peak, assuming demand remains reasonably healthy.
Sunbelt markets largely led the nation in absorption in the first half of the year, with Dallas/Ft. Worth (18,600 units absorbed), Phoenix (17,000), Atlanta (13,300) and Austin (13,200) rounding out the top five. The only non-Sunbelt market in the top 10 was New York, which led the nation with 19,500 units absorbed in H1 2026. On a percentage basis, Sarasota, Savannah, Huntsville and Boise grew their renter pools by more than 4% in the first half, followed closely by Salt Lake City, Northwest Arkansas, Phoenix and Charlotte, all above 3.5%.
Construction Remains Difficult to Pencil
The supply pullback continued in the second quarter. Deliveries totaled just 88,000 units, the lowest second quarter total (supply, like demand, is seasonal) since 2022. The reading was down 27% YOY and down more than 40% from the quarterly peak in mid-2024.
The current pipeline should translate to paltry deliveries, at least for the next year or two. At quarter close, roughly 475,000 units were under construction, translating to just 3.5% of existing inventory, half the peak rate of 7.9% in early 2023 and the lowest level since 2013. Development remains constrained by higher financing costs, elevated construction expenses, and more selective capital. With starts still muted, the volume of new supply entering the market is set to decline through 2027, extending the runway for occupancy gains even in markets still working through late-cycle pipelines.
Rent Growth Is Starting to Perk Up
Rent growth remains soft in absolute terms, but the direction of travel improved in Q2 for the first time in a year. National asking rents rose 1.5% YOY, up from 1.1% in the first quarter, the first acceleration since the softening trend began in mid-2025. Pricing power lags the occupancy recovery, so while rent growth remains below long-term norms, recent trends suggest the market is beginning to recover. We expect vacancy to continue tightening, which will allow rent growth to strengthen further over the next 12 months.
The Bay Area continues to lead the nation’s rent recovery: San Francisco (13% YOY), San Jose (7%) and now the East Bay (4.8%) are three of the top four markets nationally for rent growth. Norfolk (5.6%), Toledo (4.4%) and Reno (4.2%) have also seen outsized increases over the past year, stemming from a lack of new deliveries and steady demand-side growth. From a second-derivative standpoint (the change in the pace of growth), markets that were among the most oversupplied, including Sarasota, Austin, Charleston, Colorado Springs and Boise have seen meaningful improvement in their rent growth figures. These markets are either seeing outright rent growth, as in the case of Charleston (2.7%), Colorado Springs (0.2%) and Boise (3.7%), or more mild rent declines as in Sarasota (-3.1%) and Austin (-1.2%).
For the data behind the commentary, download the full Q2 2026 U.S. Multifamily Report.
