The second half of 2025 will bring an increase in year-over-year rent growth from 1% to 1.5% by the second quarter of 2026, according to a Gray Capital multifamily forecast. At the same time, supply growth is expected to slow from 2.65% to 2%, which will drive further rent growth into 2027.
Particularly, the Southeast is poised for a period of recovery, with elevated rent growth projected in Tampa and Miami. However, in the Southwest, higher supply persists, which is driving down price projections for markets like Austin, Denver and Phoenix. In the Midwest, markets like Indianapolis have lower projected supply growth and higher projected rent growth.
Gray Capital broke down projections by individual markets, factoring in job growth, to paint a picture of the varied performance expected across the country.
With one of the highest job growth rates in the country, demand in Austin will drive a gradual recovery in rent growth. The market will still contend with the extreme supply wave it has been experiencing for the past couple of years. Rent growth is expected to drop 1.25% by the second quarter of 2026, with supply growing 6.19%.
Job gains in Columbus are expected to be moderate at 1.35%. Slightly elevated supply of 3.16% may dampen rent growth, but projections for future economic development could drive demand higher, said Gray Capital.
Denver rent growth is expected to drop by half a percentage point, with supply growing 4.5%. Job growth in Denver has been among the highest in the nation, but it has rapidly begun to moderate. Elevated supply growth could extend Denver’s slower rent growth well into 2026, said the report.
Job growth also has been elevated in Indianapolis, but supply has grown at less than half the rate of Sunbelt markets. Gray Capital predicts a persistent falloff in supply in Indianapolis, which will drive rents up beyond 2026. The report predicts rent growth in the market of 2.59% with supply gains of 1.49% during the second quarter of next year.
Manageable supply and healthy job growth in Kansas City have led to strong rent growth projected to reach 3.48% in the second quarter of 2026. The market’s low, stable vacancy rate is also expected to be a factor in pushing up prices, said the report.
Miami’s rents are expected to increase by 3.16% during Q2 2026, while supply is expected to grow by 4.18%. Strong job growth and demand from retirees are likely to help boost prices, said the report.
Strong job growth and low supply growth are promising indicators for stronger performance in Philadelphia in 2026, but elevated vacancy levels moderate the rent growth forecast for the market. Rent growth is projected to be 1.58% with supply growth expected at 2.2% for the second quarter of 2026.
Phoenix has experienced significant job growth, but supply has also been elevated and is expected to reach 5.65% next year. As such, rent growth is expected to drop 2.4%, and without a sharp drop-off in supply, rents will continue to stay suppressed, said Gray Capital.
Increasing demand and a supply growth cooldown indicate a positive rent growth trend into next year for Tampa. While the market’s job growth is weaker than other Sunbelt markets, rent growth expectations are higher, at 3.21%, based on its larger retiree population growth, said the report.
Seattle has attracted many younger households while supply growth has been relatively low. Forecasts indicate above-average rent growth starting in the last quarter of 2025, which is further supported by consistently low vacancy in the past few years. Gray Capital expects rent growth in the market to reach 2.68%, with supply increasing 2.78%.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more inforrmation visit Asset & Logo Licensing.