After a soft finish to 2025, the U.S. apartment market is showing tentative signs of stabilization, though rents remain under pressure across much of the country.
In the first quarter of 2026, roughly 93,300 units were absorbed — slightly below the 10-year first-quarter average but enough to outpace the 75,200 new units delivered — pushing occupancy up modestly to 94.9%, according to RealPage. Even with this gain, occupancy remains just below year-ago levels and effective rents, which rose only 0.4% from the previous quarter, are still 0.5% lower than last year's rates.
Concessions continue to influence leasing trends, with about one in four apartments offering discounts averaging 7%, as operators aim to maintain occupancy heading into the spring leasing season.
Rents grew modestly in the Midwest, where demand remains healthy and new supply is limited and in the Northeast, where occupancy is now the strongest in the nation at 96.2%. By contrast, markets in the South and West saw rents slip, with occupancy holding at 94% in the South and 95.2% in the West, reflecting elevated supply relative to demand.
Tourist-driven markets, including San Antonio, Tampa, Nashville and Las Vegas, remained soft, signaling early economic strain as discretionary travel and leisure spending stay under pressure.
High-supply metros drove the largest rent declines. Austin led with a 7.4% drop, followed by Denver (-6.4%), San Antonio (-5.4%) and Tampa (-5.2%). Phoenix, Charlotte, Nashville and Raleigh/Durham also recorded declines between 3% and 5%. Even slower-growing markets such as Houston and Las Vegas experienced moderate cuts, highlighting ongoing demand pressures and market corrections.
By contrast, coastal tech hubs and select Midwest cities continued to outperform. San Francisco saw rents climb 8.9%, followed by San Jose (4.7%) and New York (3.9%), supported by return-to-office trends, optimism around AI industries and limited new supply. Virginia Beach posted a 4.1% increase, while Midwest markets, including Chicago, St. Louis, Cleveland, Cincinnati, Minneapolis and Milwaukee, saw steady rent growth of roughly 2% to 4%, reflecting strong demand and tighter supply conditions.
Construction activity is beginning to moderate. Annual inventory grew 1.8%, with about 367,000 new units added, marking the fifth consecutive quarter of slowing supply following late-2024's record peak of nearly 590,000 units.
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