The multifamily sector closed 2025 with clear signs of transition. National occupancy dipped to 94.6 percent, effective rents stalled or fell in several markets year over year, and absorption slowed alongside cooling job growth, according to RealPage. As of December 2025, national effective rents grew by 0.4 percent year over year.
The supply story is shifting just as quickly. Developers delivered about 409,000 units last year — roughly 30 percent less than in 2024 — setting the stage for a very different leasing environment in 2026.
To unpack what with these crosscurrents mean for market recovery, we asked Carl Whitaker, vice president and chief economist for RealPage, headquartered in Richardson, Texas, to weigh in on whether today’s oversupply is truly temporary, how rent growth is likely to materialize this year, and which markets and metrics will define the next phase of the cycle. What follows is an edited transcript.
Q: True or false: The oversupply and stalled rent growth some markets are currently experiencing are short-term headwinds for the multifamily sector that are expected to dissipate.
Carl Whitaker: I would say that’s largely true. Short-term oversupply, which started roughly in 2023 and carried forward through 2025, remains a key narrative in the nation’s Sun Belt metros, in particular. However, the pace at which supply began to ease in 2025 should inform a shifting set of market conditions as we enter peak leasing season in 2026.
The close of 2025 saw many of these supply-burdened markets reach four quarters — or one year — beyond their relative supply peak. Even the national new-supply number in 2025 (about 410,000 units) fell about 30 percent below its 2024 level.
And in 2026, the national supply figure could potentially fall below the 300,000 units mark, which would be the lowest level in many years. So, it’s important to note that not only does the scale of the pullback in supply matter, but also the timing and the benefit of having one full year’s leasing cycle to absorb a large chunk of the units delivered will help provide a stronger baseline narrative in the coming months.
The one part here I would say remains unknown — and an important unknown at that — is whether slowing labor market fundamentals will put a damper on demand in 2026.
We saw demand start to ease in the second half of 2025, which lines up quite well with the period in which job growth began to stall out. As such, demand uncertainty remains a big question at the onset of 2026. It is also worth mentioning that demand can afford to ease a bit as simultaneously cooling supply offers a buffer, too.
Q: Is rent growth this year likely to be driven more by new leases or renewals?
Whitaker: In most markets, renewals remain the primary driver of rent growth, and I think that carries forward into 2026, too. (RealPage forecasts year-end 2026 rent growth to be 1.9 percent.)
In 2025, 56 percent of leases were renewed, and in 2024, 54 percent of leases were renewed. One and a half to two percentage points doesn’t seem like a lot, but it effectively accounts for more than 500,000 units renewed.
Q: What are the most common concessions today?
Whitaker: One month of free rent tends to be standard for new leases, but we’ve seen that go up in recent years. The national average for concessions is typically 7 percent off asking rents, which is about 26 days free. This is the highest level of concessions since 2011 or 2012.
Q: In which markets will some oversupply be significantly digested in 2026? Where do you think oversupply will linger into 2026 and beyond?
Whitaker: I’ve been thinking of the oversupply narrative, which, again, almost exclusively applies to the Sun Belt, in three different tranches.
Tranche one: markets that could recover more quickly. This segment features a mix of metros where supply has already begun to substantially cool as well as some metros where renter demand remains in more solid shape. Therefore, these markets could be poised to absorb still-elevated supply levels. In this bucket, I would put Atlanta and Nashville as two markets where the 2026 supply pullback will be a key driver.
Tranche two: markets that could go either way. This group is a bit more nebulous, but I think of it as markets where demand could potentially get back on track while supply is easing.
We saw Orlando and Tampa kick off 2025 with some decent momentum, but that quickly dissipated in the second half of the year. However, with supply pulling back — and assuming that demand can start to stabilize — these markets could bounce back a bit more quickly.
Dallas-Fort Worth (DFW) is another market I would add in here, though its relative 2025 demand underwhelmed. Still, longer-term trends over past cycles have highlighted that it’s always wise to bet on the side of DFW demand and not against it.
Tranche three: markets that will take additional time to rebound. These markets are generally ones that are currently the deepest laggards, including Austin, Denver, San Antonio and Phoenix. I would think these markets need at least one more year before getting back closer to a supply-demand equilibrium.
Still, I think it’s important to separate Austin and Phoenix from Denver and San Antonio. Austin and Phoenix are two markets where demand remains strong even though supply has simply been too robust to absorb.
Denver and San Antonio are two markets where weaker-than-desired demand has been compounded by persistent supply pressure. If demand underwhelms in 2026 for these two markets, then I could potentially see these two markets recovering even later, in which case 2027 would be their earliest possible bounce back.
Q: What one or two metrics will RealPage be closely tracking in 2026 that will be telling about the overall health of the property sector?
Whitaker: Demand drivers, particularly job growth and wage growth, are two key metrics that I think are important to focus on. Job growth slowing to the degree that it has remained a big headwind while wage growth outpacing rent growth for three-plus years now remains a tailwind. But change in either of those two areas could influence demand for a better — or worse — outcome this year. (According to the Bureau of Labor Statistics, the U.S. economy shed 173,000 nonfarm payroll jobs in October 2025. Employers added 56,000 jobs in November followed by 50,000 in December. To put those figures into context, the U.S. economy added 256,000 jobs in December 2024 alone.)
Resident retention is another key metric. Robust retention has provided a solid foundation for occupancy amid an otherwise challenging supply environment. If retention can hold firm this year while supply eases, then that would suggest that new lease demand could withstand a cooldown while also not substantially impacting occupancy.
Q: What national and international current events are most likely to directly influence the apartment sector this year?
Whitaker: Interest rate movement may help spur investor confidence and builder appetite, but those would likely be factors that wouldn’t manifest in market trends until 2027.
Consumer health for the market-rate renter remains in solid shape. Debt delinquency remains fairly modest. Rent-to-income ratios have fallen to their lowest, or healthiest, level in five years. And cooling inflation, plus sustained wage growth, informs an improving narrative.
We’re already seeing the impact of economic policy shifts in select sectors. For example, manufacturing has struggled to support much job growth of late. And immigration policy impacts may be starting to trickle into affordable product performance, such as Class C assets.
Demographics also remain a tailwind for the industry. The number of 18-to-34-year-olds, the prime renter age cohort, continues to grow, and it’s important to mention that lifestyle changes, such as delayed marriage, are also supporting some demand strength, too. Additionally, a growing share of young adults are choosing to live alone and for longer.
Q: What questions are you fielding most frequently from clients today about the multifamily market, and what is your response?
Whitaker: The timing of when markets start to recover remains a big, big question. The impact of immigration reform also keeps coming up. And while we don’t live quite as close to the capital markets side of the business, the question of distressed sales comes up a good amount, too. We generally align with the thinking that distressed trades will increase this year, but that it will be hyper-localized both in terms of the type of property and the market, such as those where fundamentals haven’t supported any rent growth in recent years.