Just months after striking a more optimistic tone on apartment fundamentals, CoStar Group and Apartments.com have revised their outlook for the U.S. multifamily market in a more cautious direction, lifting vacancy expectations and trimming parts of their rent-growth forecast.
In their latest projections, the firms now expect national multifamily vacancy to rise to 8.8% by the end of 2026 before easing to 8.4% by the end of 2027. That represents a shift from their earlier outlook, which had forecast more stability in vacancy rates over the same period.
Rent-growth expectations were mixed in the update. The companies now project apartment rents will rise 0.2% in the first quarter of 2026, followed by a 0.5% increase in the second quarter, an upward revision of 10 basis points from the prior forecast. However, the fourth-quarter outlook was trimmed slightly, from 0.6% to 0.5%.
"The near-term rent growth outlook was maintained after modest first-quarter rent trends fell in line with expectations," Grant Montgomery, national director of multifamily analytics at CoStar Group, said.
At the same time, Montgomery said the second half of 2026 outlook was revised lower due to "the sizeable backlog of excess inventory accumulated across the last two years" that must be absorbed before conditions can meaningfully tighten. He also pointed to softer employment assumptions as a contributing factor.
"The balance of risks remains tilted to the downside," Montgomery said, citing weaker hiring expectations, slower labor-force growth and productivity gains that allow output to expand without equivalent job creation.
He also flagged higher energy prices and policy uncertainty as additional pressures on consumer spending power.
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