For the data behind the commentary, download the full Q1 2026 U.S. Multifamily Report.
Demand Is Normalizing
Multifamily demand cooled in the first quarter, with net absorption totaling 65,200 units, down from nearly 100,000 one year ago. Even so, demand was broadly in line with the long-run historical first-quarter average of 64,000 units, suggesting a relatively healthy start to the year despite a macroeconomic backdrop of limited job growth and weak population gains.
Renter household formation remains resilient, supported by longer-run demographic trends, including a surge in single-member households and persistent affordability constraints in the for sale market.
Occupancy conditions stabilized in the first quarter, though performance varied meaningfully by asset class. National vacancy was essentially unchanged QOQ and is up just 15 basis points (bps) over the past year, masking a clear bifurcation in the market. Renters continue to favor newer, high-quality product. Class A vacancy declined roughly 80 bps over the past year as renters trade up in quality, while Class B and C vacancy increased by a similar magnitude.
Despite normalizing demand, Sunbelt markets continued to lead the nation in absorption. Phoenix accounted for nearly 10% of total U.S. absorption in the first quarter, with approximately 5,800 units absorbed. Dallas/Ft. Worth (5,300), New York (4,500), Austin (3,700) and Charlotte (2,500) rounded out the top five markets.
Supply Is Falling Quickly
Supply dynamics are becoming more supportive of firming fundamentals. Deliveries were broadly flat QOQ but declined roughly 30% YOY, bringing the trailing annual total to just over 380,000 units. This marks the first time annual deliveries have fallen below 400,000 units since early 2023 and represents the slowest pace of inventory growth, on a percentage basis, since 2022. This downshift was widely anticipated and should support improving occupancy conditions over the next few years.
More important, construction activity fell to its lowest level since 2016. Development continues to be constrained by higher financing costs, elevated construction expenses and more selective capital. While near-term deliveries will still pressure markets working through pipelines, the overall volume of new supply entering the market is set to decline meaningfully in the coming quarters.
Some markets continue to grapple with elevated delivery pipelines. In the first quarter, Dallas/Ft. Worth delivered more than 7,000 units, by far the most nationally. New York delivered 6,000 units, while Houston (4,500), Charlotte (4,100) and Phoenix (3,800) also ranked among the top markets. Austin, after experiencing the largest supply boom of any major U.S. market, has moved out of the top five, delivering fewer than 2,000 units and ranking ninth nationally.
Rent Growth Continues to Underperform
Rent growth weakened again in the first quarter as elevated vacancy and competitive leasing conditions limited pricing power. National asking rents rose just 0.9% over the past year, extending the sequential softening trend that started in mid-2025. Concessions remain prevalent in supply-heavy submarkets as owners prioritize occupancy over rent growth.
At the high end of the market, rent performance has been more resilient. Ultra-luxury properties outperformed the national rent growth benchmark by roughly 70 bps, underscoring sustained demand for high-amenity, well-located product. This strength aligns with patterns captured in the AI Impact Barometer, which shows that markets and submarkets most exposed to tech- and innovation-driven employment have posted firmer rent and occupancy trends.
While AI adoption remains uneven across the broader economy, its concentration in high-wage industries is supporting demand at the top of the multifamily spectrum, particularly in urban, mixed-use environments favored by affluent renters. This growing dispersion in rent performance highlights a clear shift toward quality-driven demand at the top end of the market.
For the data behind the commentary, download the full Q1 2026 U.S. Multifamily Report.
