The nation’s multifamily market continues to rebound, primarily due to strong absorption and a declining national vacancy rate, according to the latest research from CBRE.
In the first quarter, positive net absorption—the change in the number of occupied units—reached 100,600 units. This marked the strongest first quarter performance since 2000 and more than triple the pre-pandemic first quarter average. It also was the fourth consecutive quarter where demand surpassed new completions.
After a high of 450,000 new units last year, only 70,600 units were delivered in the first quarter, with the slowdown expected to continue in upcoming quarters. According to CBRE, there were 602,500 units under construction as of the first quarter, representing 3.3% of existing inventory for the markets it tracks. This is down from a peak of 760,400 units under construction in the first quarter of 2024. New York had the most units under construction—59,000—followed by Dallas with 34,300 units and Austin, Texas, with 25,700 units.
CBRE found that 63 of the 69 markets it tracks saw positive net absorption for the first quarter. According to the research, most markets typically record very low or negative net absorption in the first quarter. New York led the way with 8,600 units, followed by Atlanta and Phoenix with 7,000 and 5,300 units, respectively. On a trailing four-quarter basis, the Sun Belt had the highest absorption rates as a percentage of total inventory, with Austin, 8.2%; Jacksonville, Florida, 7.5%; and Raleigh, North Carolina, 7.2%, at the top.
The overall multifamily vacancy rate decreased in the first quarter to 4.8%, below its long-term average of 5%. This also marked the biggest first quarter vacancy decrease on record, according to CBRE. Rates also declined in 47 markets quarter over quarter, down from 63 in the fourth quarter. Providence, Rhode Island, had the lowest vacancy rate of 2.5%, followed by 3.2% for Honolulu; Long Island, New York; New York City; and Newark, New Jersey.
Average monthly rents saw a bump, increasing 0.9% year over year and 0.3% quarter over quarter to $2,184.
“Negative rent growth continued to recede in most markets that had a recent wave of new supply,” noted the report. “As these dynamics improve, overall average annual rent growth and occupancy levels are expected to accelerate.”
The Midwest continued to experience strong year-over-year rent growth at 3.3% in the first quarter, followed by the Northeast at 2.7% and the Pacific region at 0.9%.
“Multifamily fundamentals continue to strengthen due to strong renter demand a diminishing pipeline. We expect the gains to continue this year and accelerate in 2026,” said Kelli Carhart, head of multifamily capital markets for CBRE. “Economic uncertainty will continue to impact consumer sentiment and cause capital markets volatility, but the multifamily sector is poised to remain resilient.”
