U.S. Multifamily Market Outlook for 2026: From Absorption to Acceleration
Executive summary.
After digesting the largest new‑supply wave in 40+ years, U.S. multifamily heads into 2026 with supply finally tapering and demand still resilient. Most forecasts point to improving occupancy and re‑accelerating rent growth as deliveries fall, although views differ on the magnitude of the rebound. Expect wider dispersion by metro: supply‑constrained/coastal and many Midwest markets should lead, while a subset of Sun Belt metros still working through 2023–2025 pipelines stabilizes later in the year.
Demand & supply: the big turn
Four quarters of outsized absorption in 2024–2025 reset the stage. By early 2025, net absorption was running well above long‑term norms and vacancy was falling even as deliveries remained high—evidence that household formation and the rent‑vs‑own cost gap continue to support rentals. Looking ahead, new construction is slowing into 2026 as starts pulled back sharply in 2023–2024, shrinking the pipeline and setting the table for tighter fundamentals next year.
Multiple sources agree on the direction of supply. CBRE notes that by mid‑2025, construction starts were ~74% below their 2021 peak and 30% below pre‑pandemic averages; as the pipeline shrinks, vacancy falls and rent growth turns above average in 2026. Cushman & Wakefield’s mid‑2025 MarketBeat shows the total units under construction dropping below 500,000, the lowest since 2016—another leading indicator of fewer 2026 deliveries.
Rent growth & vacancy: how fast is the recovery?
There’s genuine forecast dispersion for 2026, which investors should embrace as scenario space rather than contradiction:
Bullish scenario: With deliveries halved from the peak and demand intact, CBRE anticipates “above‑average rent growth” in 2026 as occupancy strengthens. This view is directly tied to the pipeline rollover and still‑wide cost premium to homeownership that keeps renters in place.
Base‑moderate scenario: Yardi Matrix expects a muted national track before a later upswing—calling for ~1.1% national rent growth in 2026 (after ~1.5% in 2025), reflecting a cautious stance on the pace of absorption and lingering competitive lease‑ups in supply‑heavy metros.
What’s not in dispute: the direction is positive; the speed depends on how quickly local markets clear their 2023–2025 deliveries. Fannie Mae also highlights performance dispersion—supply‑constrained/coastal and several Midwest markets have outperformed as high‑supply Sun Belt markets normalized; that pattern should continue into 2026, albeit with narrowing gaps as southern pipelines recede.
Capital markets: more liquidity, disciplined underwriting
On the financing side, the Mortgage Bankers Association (MBA) projects a meaningful pickup in 2026: total CRE originations to $709B, with multifamily at $419B—up from $583B and $361B, respectively, in 2025. That implies more lender appetite and transaction flow, even if cap‑rate compression is gradual and lender DSCR/IO discipline remains.
At the asset level, 2025 evidence shows demand leading improvement—vacancy retreating and Q1 absorption running at the strongest pace since 2000. That backdrop typically precedes better rent prints and more competitive bidding on quality assets as 2026 unfolds.
Regional view: winners and late‑cycle stabilizers
Likely leaders in 2026: Coastal/gateway and Midwest markets with modest pipelines and steady employment growth, which already posted outperformance through 2024–2025. The lack of speculative supply gives owners pricing power as demand backfills vacancies.
Late‑cycle stabilizers: A subset of Sun Belt/Mountain metros (e.g., Austin, Phoenix, parts of DFW/ATL/Nashville) that absorbed record deliveries in 2024–2025. These markets should see continued occupancy gains as starts slowdown flows through to fewer 2026 completions, but rent growth may lag first before accelerating into late 2026/2027.
Dallas–Fort Worth lens (relevant to many Texas investors): Local trackers show absorption improving and deliveries decelerating into mid‑2025, with research firms expecting further pipeline drawdowns into 2026. Submarket selection is critical—northern corridors with heavier 2024–2025 deliveries typically normalize later than inner‑ring suburbs with thinner pipelines.
Construction costs & starts: why supply keeps falling
Even as input inflation cooled from 2022 peaks, higher financing costs for construction loans and tighter bank credit have curtailed starts—a dynamic visible across national cost/starts trackers and industry commentary. CBRE’s U.S. Outlook (2024 chapter) projected that the decline in starts would leave 2026 deliveries at less than half of current levels, paving the way for recovery in occupancy and rents—exactly the setup forming now.
Risks & watch‑list items for 2026
Macroeconomic volatility. A slower‑than‑expected economy could delay rent acceleration even as vacancy improves; conversely, faster disinflation could lift transaction velocity. Keep an eye on 10‑year yields and employment momentum.
Policy & insurance costs. Operating lines (especially insurance in coastal/southeastern markets) remain a swing factor for NOI trajectories—even if expense growth has decelerated in 2025 on some reports. Underwrite with localized assumptions.
Local pipeline pockets. Markets with still‑elevated lease‑up inventory may face a longer glide path to rent growth; track deliveries vs. net absorption quarterly at the submarket level.
Strategy playbook for owners & investors
Lean into operations in H1 2026; optimize renewals and occupancy while letting the pipeline roll off—“heads‑in‑beds” remains the winning tactic until pricing power broadens.
Underwrite 2 cases for rent growth (base vs. upside) given forecast dispersion (e.g., Yardi ~1.1% national vs. CBRE “above‑average”). Price to the base, finance for resiliency, manage for upside.
Capex that pays for itself. Focus on unit turns and expense‑light amenities with measurable lease‑trade‑out or retention lift; continue to scrub insurance/utilities and vendor contracts.
Capital stack flexibility. Expect more liquidity (agencies, banks, select debt funds) but persistent proceeds discipline; explore structured tranches to bridge basis gaps on sound business plans.
Bottom line
The setup for 2026 is the most constructive it has been since the 2021–2022 surge—demand is firm, supply is falling, and capital is returning. The reacceleration will not be uniform, but the direction is clear. Owners who optimize occupancy now and maintain pricing discipline while pipelines thin are best positioned to capture the rent‑growth tailwind as 2026 progresses.
Sources & further reading
CBRE – U.S. Real Estate Market Outlook 2025 (Multifamily chapter) (above‑average rent growth in 2026; sharp starts decline) and Mid‑Year 2025 Review / Press releases (absorption and vacancy trends).
Fannie Mae – 2025 Multifamily Market Outlook (dispersion across supply‑constrained vs. high‑supply metros).
Freddie Mac – 2025 Multifamily Outlook (national rent/vacancy baselines and market dynamics).
Cushman & Wakefield – U.S. Multifamily MarketBeat Q2 2025 (pipeline under construction trending to multi‑year lows).
Yardi Matrix – First‑half 2025 performance & forward rent forecasts (2026 ~1.1% national rent growth trajectory).
RealPage Analytics – Q2 2025 Update (resilient demand, occupancy improvements, renewal capture).
MBA – CREF Forecast (Feb 2025) (2026 originations: $709B total / $419B multifamily).
