Slowing Apartment Supply Begins To Restore Landlords' Pricing Power
After several years of record apartment construction, the multifamily market is entering a new phase as slowing deliveries begin to restore landlords' pricing power, according to Marcus & Millichap.
Multifamily completions are projected to fall nearly 34% year-over-year in 2026, dropping to their lowest level since 2014, Peter Standley, managing director and national division leader for multifamily at Marcus & Millichap, said in a research video. At the same time, fewer major markets are experiencing elevated construction activity, reducing one of the primary headwinds that have weighed on apartment fundamentals in recent years.
"The question investors are now asking is simple," Standley said. "As new supply declines, how will that impact performance? And what does it mean for opportunities going forward?"
According to Marcus & Millichap, early signs of rebalancing are already emerging, shaping stable forecasts. The national vacancy rate is expected to remain near 5.3% this year, below the long-term average, while effective rents are forecast to increase about 1.8% year-over-year.
Also, apartment absorption during the early months of 2026 ran roughly 50% above the long-term average, supported by improving employment trends and sustained renter demand. As supply declines while demand holds, Standley said, pricing power is beginning to return.
The recovery, however, varies by market.
Sun Belt metros are still absorbing elevated deliveries from the past several years, keeping vacancies higher and concessions more common in the near term. In contrast, supply-constrained markets outside the Sun Belt are already posting tighter vacancies and stronger rent performance because relatively little new construction has been added.
Standley said Class B apartment properties with durable demand drivers are particularly well positioned to benefit as the market continues to rebalance.
While pricing power is not returning rapidly, the diminishing construction pipeline is helping stabilize fundamentals and making rent growth and occupancy trends more predictable, according to Marcus & Millichap.
"As we move through 2026, the multifamily story is increasingly becoming one of balance," Standley said. "Supply is retreating, demand is holding, and fundamentals are stabilizing."
Source: GlobeSt/ALM