July 2026 - Real Estate Market Update

We break down the July 2026 multifamily market update using CoStar and Apartments.com data, with a clear takeaway: the market stabilizes while operators still fight for real revenue. We walk through what elevated vacancy, widespread concessions, and weak rent growth mean for underwriting and day-to-day operations.

• supply wave slowing after the 2024 delivery peak
• vacancy staying above 8% as absorption cools
• concessions becoming common and masking true economic rent
• tracking advertised rent vs effective rent vs net collected revenue
• rent growth hovering under 1% and why that changes deal math
• market-by-market divergence and why local supply matters most
• lower priced properties outperforming higher-end product
• execution focus: occupancy, collections, retention, expense control
• operational discipline: control turns, underwrite flat, know the submarket
• mindset shift from appreciation to operations

Transcript

Headline: Stable Not Recovered

SPEAKER_00 0:34

Welcome back. And this is here is your July 2026 multifamily market update based on the latest mid-year analysis from apartments.com and CoStar. The headline is simple. The multifamily market has stabilized, but it's not fully recovered. The supply wave is slowing. Demand is returning to more normal levels, but vacancy remains elevated. Rent growth remains are still doing a lot of the work. For operators, that means one thing: this is still an execution market. Let's get into the numbers. The supply wave is fading. Multifamily deliveries peaked at in 2024 when approximately 696,000 new units came online nationally. Deliveries then declined to 531,000

Supply Wave Fades After 2024

SPEAKER_00 1:37

units in 2025. For 2026, Kostar projects approximately 421,000 new units will be delivered. But lower construction does not immediately erase the inventory already delivered. The market still has to absorb hundreds of thousands of units that were built during the pre-pandemic era during the development cycle. That is why the supply problem is improving, but it's not gone. Vacancies remain elevated. National multifamily vacancy remains above 8% and is expected to stay in the mid-8 range through the end of 2026. The reason is straightforward. Demand has not been strong enough to fully absorb the

Vacancy Stays High As Demand Slows

SPEAKER_00 2:32

amount of newly supplied delivered over the past several years. Apartment absorptions peaked approximately 697,000 units in 2021, and it fell roughly to 456,000 in 2025. For 2026, CoStar expects 375,000 units to be absorbed. For operators, the lesson is clear. Do not confuse fewer deliveries with immediate pricing power. Supply pressure fades slowly. Concessions remain widespread. Approximately, listen to this guys, 40% of advertised apartment units currently include some type of discount or concession. You heard that right. 40%. Before the pandemic,

Concessions Distort True Economic Rent

SPEAKER_00 3:26

that figure was below 30. In mid-2022, fewer than 10% of advertised units included concessions. That is a major shift. That tells you what how the market, what has happened and how the market has shifted. It is a renter's market as it is a buyer's market. They both have options. Operators are still using free rent, reduced deposits, waive fees, and other incentives to attract renters and protect occupancy. The problem is that concessions can hide the true economic rent. A property may appear occupied, but if the operator is giving away six or eight weeks of rent, the effective revenue is materially lower than the advertised rents suggests. Operators should be tracking three numbers separately. Listen closely. Those are not the same numbers. Rent growth remains weak. National annual rent growth was approximately 0.7% during the second quarter. COSTAR projects a slight increase to around 0.8 during the third quarter, with rent growth expected to finish the year near that level. That is

Weak Rent Growth And Fragile Deals

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stabilization, not acceleration. Operators should not be underwriting aggressive rent growth into acquisitions or refinance assumptions. The market is not supporting that nationally right now. If a deal requires four or five percent rent growth to create acceptable returns, the deal is probably too fragile. Local market selection matters. The national average hides major differences between markets. San Francisco, for instance, is currently leading major markets with rents up approximately nine percent

Local Winners Losers And Key Questions

SPEAKER_00 5:50

year over year. San Jose, California, followed with rent growth of approximately 5.7%. Those markets are benefiting from stronger tech sector demand and relatively limited new apartment supply. On the other side, the heavy Sunbelt markets remain under pressure. San Antonio rents declined approximately 4.5% year over year. Austin rent declined approximately 3.3%. Austin has been getting hammered. Regionally, the Midwest, Northeast, and Pacific markets are outperforming the national average. The South and Mountain regions are underperforming. That means operators cannot rely on national headlines. The real questions are local. How much supply is still under construction in your market? How many units are in leaseup? What concessions are nearby properties offering? And what is a true effective rent? And is local employment growth strong enough to absorb the remaining inventory? Lower priced apartments are outperforming. The strongest rent growth is currently occurring in lower priced properties. Co-stars, one and two-star properties posted rent growth of approximately 1.1%. Three-star

Lower Priced Units Lead Performance

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properties recorded approximately 0.7% rent growth. And four and five luxury properties, five star, four and five-star luxury properties, roughly 0.6% growth after recovering from negative territory. The operating advantage comes from retention, collection, and controlling expenses, not simply pushing rents. What this means for operators. First, protect occupancy. In a market with vacancy above eight percent, occupied units with reliable collections may be worth more than an aggressive rent increase that creates turnover. 100%, this should

Five Operator Moves That Matter

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be the you need to be survive the storm. That's our strategy right now. We're surviving the storm. Second, measure concessions honestly. Do not let headline rents create false confidence. Track effective rents and net collected revenue. Third, control turns. When rent growth is below 1%, a $5,000 unnecessary turn can erase a substantial portion of the annual revenue growth from that unit. Fourth, underwrite flat. Assume limited rent growth, realistic vacancy, ongoing concessions, rising insurance, and disciplined repair expenses. Let upside be earned through execution rather than inserted into a spreadsheet. And fifth, know your submarket. The opportunity is no longer simply multifamily. The opportunity is the right basis, the right submarket with a manageable supply and durable renter demand. The discipline, standards, and identity lessons are this. This market is exposing operators who built their strategy around appreciation instead of operations. Discipline means you do not manufacture rent growth that the market is not producing.

Discipline Standards Identity Under Pressure

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Standards means you do not accept poor collections, slow turns, weak leasing follow-up, or inaccurate reporting. Identity means you operate like an owner when conditions are difficult, not like a speculator waiting for the market to rescue you. The supply wave is fading. Eventually, lower construction should create a healthier balance between supply and demand. But the operators who benefit from the next cycle will be the ones who can protect

Protect Assets Now To Win Later

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their assets during this cycle right now. This is not the season for hype. This is a season for occupancy, collections, retentions, expense control, and disciplined execution. Because in multifamily, the market creates the environment, but the operator creates the outcome. Thanks for listening, thanks for watching. Peace out.