Apartment vacancy falls to 4.3% as supply eases

What's happening

U.S. multifamily vacancy fell 50 basis points to 4.3% in the second quarter of 2026, below the long-term average of 5.0%, according to CBRE. Net absorption reached 167,500 units, nearly double the first quarter, while completions declined 14% year over year to 77,700 units. It was the second straight quarter in which demand exceeded new supply.

Rent growth remains modest, with average monthly rent of $2,257, up 0.5% year over year.

• Vacancy: 4.3%, down 50 basis points.
• Absorption: 167,500 units.
• Deliveries: 77,700 units, down 14%.
• Average rent: $2,257, up 0.5% annually and 1.5% quarterly.
• Breadth: All 69 tracked markets posted positive absorption.

What it means for owners, tenants and investors

Fundamentals are improving as the supply wave recedes, though capital markets tell a different story: multifamily CMBS delinquency rose to 7.69% in July per Trepp, and MSCI shows pricing down 1.7%. Operators with sound capital structures should benefit from rising occupancy; highly leveraged owners still face refinancing strain. CBRE noted the Pacific region was among leaders in rent growth, relevant for Southern California owners.

Developers are responding to weaker capital markets by pulling back on new starts, which should support occupancy for existing properties over the next few years. Renters in many metros still have concessions available, but those are likely to narrow as vacancy declines.

Operating fundamentals are firming even as legacy debt problems work through the system.

What to watch

Whether rent growth accelerates in the second half as fewer new units compete for tenants. Also watch multifamily loan performance as distressed properties are resolved.

Photo: Tobias Wilden / Unsplash.