Multifamily housing entered 2026's first quarter in a holding pattern, as sharply slowing development and cooling but historically normal demand offset each other to keep national vacancy rates essentially unchanged, according to Cushman & Wakefield.
Net absorption totaled 65,200 units, down 34% year-over-year, but still broadly in line with long-run first-quarter averages. The figure points to a normalization in renter demand rather than a breakdown, even as softer labor market conditions and subdued population growth temper momentum. Underlying support continues to come from household formation trends and persistent affordability pressure in the for-sale housing market, the report said.
On the supply side, new deliveries fell roughly 30% year-over-year, while construction activity dropped to its lowest level since 2016. The pullback marks a clear turning point in the development cycle, with fewer projects entering the pipeline and fewer units scheduled to hit the market in the coming quarters.
While select markets continue to work through heavy backlogs, the broader trajectory points to a meaningful slowdown in inventory growth.
Despite those shifts, vacancy remains stable. National rates were flat quarter-over-quarter at 9.4% and have hovered between 9.2% and 9.4% for more than a year. That tight range reflects offsetting forces rather than equilibrium with weaker absorption on one side and declining supply on the other, producing a market that is neither tightening nor loosening.
Under the surface, however, performance is increasingly fragmented. Class A properties continued to outperform, with vacancy declining over the past year as renters traded up to newer product. Class B and C assets moved in opposite directions, with rising vacancy and softer demand weighing on performance.
Rent growth reflected a similar split, with ultra-luxury properties outpacing the broader market even as the national rate slowed to just 0.9% over the past year.
Geographically, demand remained concentrated in growth markets. Phoenix accounted for nearly 10% of U.S. absorption in the quarter, followed by Dallas/Fort Worth, New York, Austin and Charlotte.
While near-term pricing power remains constrained, the report points to improving medium-term fundamentals amid a contracting construction pipeline. With development activity at its lowest level in nearly a decade, supply pressure is expected to ease further, setting the stage for gradual stabilization in occupancy and a potential firming in rents later in the year.
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