Rent growth has started to pick up for multifamily Houston as supply slows considerably in the market. In 2025, outer ring hubs, including Baytown, Conroe and Galveston, enjoyed rent growth, according to an investment report from Marcus & Millichap.
For 2026, the momentum is expected to continue, with Marcus & Millichap projecting another 2.3 percent increase overall for multifamily in Houston to $1,410 per month.
"Still, Houston is the lowest cost primary market — a draw for in-migration and future rent gains," it explained.
The favorable trend comes as deliveries are forecast to fall to their lowest level seen since 2013 this year. The biggest supply contraction is anticipated to happen in Interstate 610 Loop, which is set for a 10 percent drop in 2026. But some areas are projected to see an influx of deliveries, including the Northwest, Katy and the Sugar Land-Stafford submarket.
Also, Marcus & Millichap expects construction overall to drop to 9,000 units, representing just half the five-year average.
In terms of transactions, there is strong investor demand for two types of multifamily properties in Houston. One is for assets with smaller valuations, as activity surged 60 percent year-over-year in late 2025 for properties worth less than $10 million. The other is for assets built after 2000, with transactions in that category soaring by 50 percent from the previous year in 2025.
"Investor focus has shifted toward areas with limited new supply, such as River Oaks," Marcus & Millichap further noted.
"Southeast Houston submarkets like Clear Lake, Pearland, Pasadena, and Galveston — where vacancy rates have stayed below the metro average — are also drawing interest, supported by steady demand from a growing working-class population locally amid the nationwide trend of softening white-collar job creation."
Another important point: Houston offers the highest cap rate averages among major Texas metros, which is drawing investor attraction to the city, according to the brokerage.
On the negative front, Marcus & Millichap projects that vacancy will rise in Houston's multifamily sector by 20 basis points in 2026 to 6.3 percent. This would rank 120 basis points below the city's long-term average — but still in the top three nationally among cities with the highest vacancy rates.
Also, job growth is expected to slow by 0.2 percent this year, which would be the second smallest yearly increase seen since 2016.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.