Soft rents and longer vacancies challenge apartment investors heading into 2026
Apartment rents continued to edge lower in November as a wave of new supply and softer household formation kept pressure on owners and operators, adding another headwind for lenders and multifamily investors.
According to Apartment List’s latest National Rent Report, the national median rent fell 1.0% in November from October and stood at $1,367.
Rents were down 1.1% year over year and roughly 5% below their 2022 peak, following what the firm described as a record run-up in 2021 and 2022.
The national vacancy index for stabilized properties held at 7.2%, the highest level in the series since 2017, as new units continued to come online into a slowing market.
“Earlier this year, it appeared that annual growth was on track to flip positive for the first time since mid-2023; however, that rebound stalled out and reversed course during a particularly slow summer,” Apartment List researchers said.
They noted that November’s 1.0% monthly decline was steeper than the 0.8% drop a year earlier and that the off-season slowdown arrived earlier than in pre-pandemic years.
Sun Belt reset, Midwest interest
The report pointed to a historic building cycle that has only recently started to cool. Over 600,000 new multifamily units reportedly hit the market in 2024, the most in a single year since the 1980s.
Apartment List said 243,000 units were completed in the first half of this year alone, even as a “shaky labor market” appeared to restrain demand in many metros.
Weakness remained most pronounced in high-construction Sun Belt hubs, where developers has led the country in new permits.
Austin’s metro-wide median rent fell 6.8% over the past 12 months and was reported to be more than 20% below its 2022 peak, even as the market continued to add new units.
Other heavy building markets, including Denver, Phoenix, San Antonio, Dallas and Orlando, also ranked among the steepest year-over-year decliners.
At the same time, some metros still saw solid rent gains. Providence led large markets with rents up 5.2% year over year, after several years as a lower-cost alternative to Boston and New York.
Yardi data showed renters gravitating toward comparatively affordable Midwestern markets such as Cincinnati, Kansas City and St. Louis, even as incentives picked up in costlier coastal cities.
What it meant for lenders and investors
For mortgage professionals and multifamily lenders, the combination of slower rent growth, longer list-to-lease times and record vacancies point to more conservative underwriting and closer scrutiny of rent rolls.
Apartment List’s time-on-market index shows units taking an average of 36 days to lease in November, two days longer than a year earlier and roughly double the turnover speed seen in 2021’s tightest months.
All of Apartment List’s key indicators suggest that multifamily conditions remain soft heading into 2026.
The firm said that as construction slows further, “rent prices and occupancy should begin to stabilize” but warned that the supply boom still has “a bit of runway” and that weaker labor conditions could extend the market’s adjustment period.
For borrowers, that meant the next year is likely to be defined less by rapid growth and more by careful asset selection, realistic pro formas and a renewed focus on income durability.
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