The apartment market may feel soft, but Carl Whitaker argues that’s more perception than reality. While rents have remained relatively flat and new supply continues to pressure fundamentals in several Sun Belt metros, the RealPage chief economist says demand has been remarkably strong, helping the industry absorb one of the largest construction waves in its history and setting the stage for a gradual recovery.
“From a rent perspective, the market has held pretty flat, and we haven’t seen a huge catchup in occupancy. A big misconception is that demand is weak, but that hasn’t been the case,” he says. “The demand has been really strong. We’re still contending with the biggest wave of supply of our professional careers, and it is taking time to work through that.”
Absorption in the second quarter continued to remain resilient, even with the economic noise and headwinds moving forward. Whitaker says absorption in the second quarter and year to date has arguably been stronger than 2025 when you control for relative supply volumes.
“2025 was technically stronger, but we delivered more supply through the mid-part of last year. The pendulum has swung more toward a strength of demand story this year than we were talking about last year,” he says.
The industry’s ability to absorb new luxury product has been particularly noteworthy. According to Whitaker, Class A rents are growing about 1.9% year over year, suggesting demand for newly delivered apartments has remained healthy despite elevated supply levels.
He also notes that concessions are becoming more common, though the size of discounts has remained relatively stable. Much of the increase is being driven by Class C properties, while concession activity in the Class A segment appears to be leveling off as supply pressures begin to moderate.
At mid-year, Whitaker says how you view the market depends on whether you’re an internal optimist or pessimist. He notes rents are still growing at a slower rate than the mid-2010s, but if you compare 2026 with 2025, seven of the past eight months have seen month-over-month rent change surpass the prior year.
“The trend is moving in the right direction, but it’s taking a little longer to bring to life. The emergence of momentum is starting to brew,” he adds, noting he’s cautiously optimistic as peak leasing season starts to wind down.
That improving trend, however, is playing out unevenly across the country. Whitaker points to supply constraints as a major differentiator, helping established urban markets outperform many Sun Belt metros that are still working through elevated development pipelines.
“Chicago and New York continue to benefit from a simple supply-and-demand dynamic. There’s not a lot of new supply in those markets, while demand remains high,” he says.
The Bay Area, particularly downtown San Francisco, is on a trajectory of its own, aided by limited apartment deliveries and demand tied to the artificial intelligence sector, according to Whitaker.
On the other end of the spectrum, markets such as Austin, Texas; Tampa, Florida; Denver; and Houston continue to face supply-related headwinds. While Austin recently posted its first positive quarter-over-quarter rent growth since 2022, Whitaker says the market still has significant ground to make up. Jacksonville, Florida, and Raleigh-Durham, North Carolina, are among the markets showing some signs of recovery as new supply begins to moderate.
As owners and operators begin planning for 2027, Whitaker says there could be some relief on the expense side. Insurance and tax increases have begun to normalize after several years of sharp growth, although higher marketing costs and concession spending remain important considerations in a competitive leasing environment.
Looking at the second half of the year, Whitaker says the biggest risk is the broader economic uncertainty—unknowns with job growth and consumer sentiment.
“They haven’t derailed the market thus far, but that doesn’t mean it couldn’t happen,” he adds. “I want to see if July can avoid the rent cuts that happened last year. Then we will have reached a significant inflection point. That will be a key pivot point.”