The multifamily sector is beginning to recover from the supply surge that defined performance over the last several years. New deliveries have slowed from their 2024 peak, net absorption has improved, and national occupancy has regained meaningful ground.
Even so, the recovery remains incomplete. Average effective rent growth remains limited, and lease concessions continue to expand in both availability and value. For many high-supply markets, especially across the Sunbelt and Mountain West, better occupancy has not yet translated into renewed pricing power.
The tension between improving fundamentals but without a clear rent growth rebound is likely to define the next phase of the apartment market recovery.
Methodology notes: All figures refer to conventional properties with at least 50 units unless specified otherwise. Average effective rent refers to rents on new leases.
How the Supply Surge Reshaped Performance
Across all multifamily verticals, conventional and non-conventional, more than 3.1 million new units were added nationally from 2021 through 2025. Of those, approximately 2.1 million units were in conventional multifamily properties.
Those 2.1 million units were delivered in a five-year period in which national net absorption totaled only about 1.75 million units. The crux of the imbalance between new supply and demand occurred in the 2022 through 2024 period. In those three years, deliveries outpaced net absorption by about 900,000 units.
The impact on occupancy was substantial. National average occupancy closed 2021 at 94%. By the end of 2024, that average was down to 88%. Of course, the impact was not uniform. Markets across the Mountain West and Sunbelt bore the brunt of the surge in new supply. Many of these markets continued to generate solid demand, but not enough to absorb the scale of new supply.
By the end of 2024, markets like Charlotte, Phoenix, Austin, and Nashville featured market-level average occupancy below 85%. With occupancy well below the typical range nationally and in many markets around the country, rent growth was very difficult to come by in subsequent years.
In Austin, average effective rent for new leases fell by a combined 9% in 2024 and 2025. Many other high-supply markets found themselves with negative rent growth or with combined gains of 1% or less in that two-year period. “Lease concession availability rose sharply, and not just at the top of the market, but also in the workforce housing segments.
A Recovery in Occupancy, Not Yet in Rents
Over the last twelve months, deliveries have eased. Approximately 340,000 new conventional units were added nationally from May 2025 through April 2026. That was nearly 40% lower than the previous twelve-month period and represented the fewest new units for that portion of the calendar in four years.
This moderation has helped occupancy begin to recover. National average occupancy finished April at 90% after a gain of almost 300 basis points over the last year. For properties that were already stabilized twelve months ago, average occupancy closed April at 93%.
Improvement has also appeared in the harder hit high-supply markets. Areas like Charlotte, Austin, Phoenix, and Nashville have climbed back into the 87-88% range after dipping below 85% not too long ago.
Net absorption has outpaced new supply over the last year, and occupancy has gained important ground. However, partially due to average occupancy remaining well below its usual range in many markets, a rent growth recovery remains elusive.
Average effective rent rose only by 0.5% over the last twelve months. That national result was also boosted by markets that have not faced supply pressure in recent years. Areas such as Austin, Denver, San Antonio, and Tampa have seen average effective rent fall by between 4% and 6% over the last year despite healthier fundamentals.
Lease concessions remain a major headwind for rent growth as well. Discounts continue to weigh on rent performance not only due to widespread availability but also due to the average value. Notably, both measures have increased at a greater rate over the last twelve months than they did in the twelve months prior. This has occurred despite some expectations that concessions might begin to recede alongside the slowdown in deliveries.
25% of conventional properties were offering a discount for new leases at the end of April with an average value equal to about 4.4 weeks off a 12-month lease. Both availability and average value rose by roughly 15% year-over-year.
Considerable variance exists at the market level. Austin finished April with 56% of conventional properties offering a lease concession for new residents with an average value of almost six weeks off an annual lease. San Antonio and Dallas – Fort Worth also ended the month with availability above 50%. Charlotte, Denver, and Nashville matched Austin for average discount value.
The Next Phase of Recovery
The multifamily sector is in a transition phase. Sustained new supply in recent years at a level not seen in decades had wide-ranging effects. Average occupancy tumbled from a peak of almost 96% in 2021 down to a trough of 87% in early 2025. Annual average effective rent growth has been below 3% since 2022, and lease concession availability and average value have surpassed their pandemic-era peaks.
However, the industry is now in the early stage of a recovery. New supply is down considerably year-over-year, net absorption is riding a four-year uptrend, and average occupancy has begun to recover. Improved rent performance and a reduced reliance on lease concessions have yet to materialize, but these developments come later after fundamentals strengthen.
Much uncertainty remains, especially outside the multifamily sector. Within the industry, it remains to be seen whether necessary demand momentum can be maintained while operators reduce their reliance on lease discounts.
Early signs are that the industry is not yet at that point, but that would be the next step in a broad recovery that will likely take multiple years to fully unfold. Fortunately, annual new supply is expected to remain below 400,000 units in both 2026 and 2027.
