New York - April 14, 2026 – The U.S. apartment market is turning a corner as a sharp decline in new supply starts to ease pressure on fundamentals.
New construction activity has fallen to its lowest level since 2016, and deliveries declined roughly 30% year-over-year in the first quarter. At the same time, demand has returned to more typical levels, helping keep vacancy effectively unchanged at 9.4% and within a narrow range that has persisted for more than a year.
“The supply cycle is clearly shifting,” said Sam Tenenbaum, Head of Multifamily Insights at Cushman & Wakefield. “Construction has slowed meaningfully, and demand is holding at levels consistent with historical norms. That combination is beginning to stabilize market conditions.”
Apartment demand totaled 65,200 units in the first quarter, down from elevated levels one year ago but broadly in line with long-run seasonal averages. While job growth and population gains have moderated, renter demand continues to be supported by structural factors, including affordability constraints in the for-sale market and growth in single-person households.
Supply Pipeline Contracts
Supply conditions are becoming more favorable as the development cycle pulls back. Deliveries declined roughly 30% year-over-year, bringing the trailing annual total to just over 380,000 units, while construction activity continues to contract.
Higher financing costs, elevated construction expenses and more selective capital are limiting new starts, pointing to a sustained reduction in supply over the coming quarters.
Some markets continue to work through elevated pipelines. Dallas-Ft. Worth led the nation in deliveries in the first quarter, followed by New York, Houston, Charlotte and Phoenix.
Demand Normalizes; Performance Varies by Asset Class
Demand has moderated but remains stable by historical standards. Sunbelt markets continued to lead absorption, with Phoenix, Dallas-Ft. Worth, New York, Austin and Charlotte accounting for the largest gains in the quarter.
Market conditions continue to diverge by asset quality. Class A vacancy declined over the past year, while Class B and C vacancy increased by a similar magnitude, reflecting continued renter preference for newer, well-located product.
Rent Growth Remains Limited
National asking rents rose 0.9% year-over-year, as elevated vacancy and competitive leasing conditions continue to limit pricing power. Concessions remain common in supply-heavy submarkets as owners prioritize occupancy.
At the upper end of the market, rent performance has been more resilient, with high-end properties outperforming the national average, supported by demand tied to higher-income renters and technology-oriented employment.
Outlook: Supply Shift Supports Gradual Improvement
With construction slowing and deliveries declining, supply conditions are becoming more supportive.
If demand tracks near historical averages, total absorption in 2026 is expected to range between 250,000 and 300,000 units. That level of demand should be sufficient to keep vacancy stable and support gradual improvement in rent growth over time, though performance will vary across markets.
“The direction of the market is becoming clearer as the supply pipeline contracts,” Tenenbaum said. “While conditions remain uneven, the balance between supply and demand is moving in a more favorable direction.”
