Jay Parsons 2026 Mid-Year Apartment Market Check-In

We’re at the halfway point of 2026. How’s the year playing out relative to expectations, and what’s in store for the second half? It’s a mixed story.

On the one hand, 2026 feels like maybe the most “as expected” year since pre-COVID. Most of us expected to see some gradual improvement, though no big resurgence, and that’s pretty much what’s played out. Year-to-date rent growth “surged” to a four-year high, though I put “surged” in quotes for a reason: It’s still not much. Year-to-date rent growth is a bit better than the prior few years, yes, but we’re well below pre-COVID norms.

Downward Rent Pressure Is Not Slowing Down

Is it a demand issue? Some think so, but I’m not convinced. Absorption could be better, sure, if we had more consistent job growth, especially for new college graduates. But absorption — while moderating — remains above historical norms. So, while it’s tempting to want to find a new villain to blame, the old one still bears most responsibility: supply. And with supply, there’s good news and bad news for apartment operators.

The good: Apartment COMPLETIONS are plunging this year. We’re past the peak wave of deliveries, and trending toward mid-2010s levels.

The bad: There’s still a lot of active lease-ups in the market. These are apartments completed in 2024-25 that haven’t yet achieved stabilized occupancy. That means they’re still trying to fill up, which usually means they’re still offering a heavy dose of rent concessions – and that, in turn, puts downward pressure on rents across the market.

Apartment Market Predictions for the Second Half of 2026

It’s unlikely we’ll see much rent momentum until lease-up volumes normalize, and occupancy rates recover more. That’s especially true in the most challenging, high-supply markets like Austin, Phoenix and Denver, among others.

Of course, there are exceptions across the United States. Most notably, the California Bay Area remains super hot — with rent momentum now extending from San Francisco and Silicon Valley out into the East Bay. In the Bay Area, there’s been very limited supply since COVID. And more recently, there’s been a demand resurgence fueled by AI jobs and (in San Francisco in particular) improved quality-of-life issues.

We also continue to see solid fundamentals in other lower-supply markets across the U.S. – further cementing the reality that it’s all about supply. That includes much of the Midwest and Northeast regions, as well as places like Virginia Beach — which has steadily snuck up the rent growth leaderboards.

So, what’s in store for the second half of 2026?

Many operators expect to see improved momentum in the back half of this year, and for plausible reasons. Primarily: We’re moving further and further away from that peak supply wave in most of the country, giving most markets time for demand to catch up with supply. We certainly aren’t “back” yet – meaning occupancy remains below normal – but we’re trending in the right direction, and I think the pace should moderately accelerate.

Well-Located Suburbs Look Optimistic

That said, we should acknowledge the role of seasonality. We’re passing the peak leasing season for most markets, so there’s less runway for leasing momentum. For that reason, you probably shouldn’t expect a big rebound in most cases.

Furthermore, I’d expect to continue seeing a bumpy path to normalization. That could mean two steps forward, one step back. Don’t be surprised by such choppiness. The road to recovery is rarely smooth.

Also, to state the obvious, not every market will recover at the same pace. In the higher-supplied Sun Belt and Mountain regions, we’re seeing earlier signs of momentum in parts of Atlanta, Dallas, Orlando, Jacksonville, South Florida and Salt Lake City, among others. The aforementioned laggards (Austin, Denver, Phoenix) could still lag that pace.

We should also see a lot of variance by neighborhoods within the same metro area, as well. Where we see the most green shoots today tend to be neighborhoods where apartment construction petered out fastest. A lot of those right now are in or around urban core areas, and we could see urban areas outperform suburban at some point — which would be a reversal of pre-COVID trends. However, I’d remain optimistic on the right types of suburbs, as well, particularly well-located higher-income suburbs near jobs and major entertainment districts, etc.

Slow-and-Steady Improvement

Bottom line: For operators, the market is improving but at an unexciting pace. It’s been a slog for a long time, and many of you are more than ready for better days, I’m sure. But stay patient. Focus on filling units and retaining current renters, as you have been. And as lease-up pressures mitigate (and assuming at least some economic growth), you should see slow-and-steady improvement.

About Jay

Jay Parsons is a rental housing economist, advisor and speaker. He has advised numerous multifamily and single-family rental housing stakeholders – from institutional investors, REITs, regional operators, lenders, regulators and government agencies.

Jay hosts a weekly podcast called The Rent Roll with Jay Parsons, which in 2025 ranked among Spotify’s top 1% for most shared shows and in the 2% for listening time and for growth.

Jay has been cited in The Wall Street Journal, Bloomberg, The Financial Times, The Economist, The New York Times, The Washington Post, NBC News, and he has appeared on CNBC and BloombergTV. His commentaries have been published by Barron’s, the Pension Real Estate Association, the Mortgage Bankers Association and American Banker, among others.