Weekly Real Estate News
The U.S. apartment market may recover rental pricing power faster than previously expected, according to a revised outlook from Apartments.com, which raised its forecast for annual rent growth in late 2027 while anticipating a gradual decline in vacancy.
In its November 3 forecast announcement, the CoStar Group business projected national annual rent growth of 1.4% through the fourth quarter of 2026, an upward revision of 50 basis points. It increased its forecast for the fourth quarter of 2027 to 2.6%, from a previous estimate of 1.9%.
Vacancy forecast points to gradual absorption
The company expects national multifamily vacancy to remain near 7.9% through 2026 before declining to approximately 7.5% by the end of 2027. That would mark an improvement as properties lease units delivered during the heavy construction period of 2024 and 2025.
The distinction between vacancy and rent growth is important. A market can continue to carry substantial empty inventory even as effective rent growth begins to accelerate. The forecast does not mean vacancy has already fallen to 7.5%, or that landlords in every metropolitan area will achieve the national projected rent increases.
Grant Montgomery, CoStar’s national director of multifamily analytics, attributed the revised outlook to stronger-than-expected apartment demand and fewer new deliveries. Those forces can help existing properties lease vacant units and give operators more flexibility when setting renewal and new-lease prices.
Slower construction helps existing properties, but raises a longer-term question
For apartment owners and lenders, the forecast suggests that the surge in newly completed buildings is being absorbed. As concessions moderate, properties may see better revenue performance even without dramatic rent increases. The pace of improvement will depend on individual markets, lease-up exposure and the amount of competing supply.
For renters, a return to faster rent growth would be less welcome. The latest projection still describes moderate national increases, not a return to the unusually rapid rent inflation seen in some earlier years. But higher rents would add pressure to household budgets where wages are not keeping pace.
A slower development pipeline can relieve short-term oversupply while potentially limiting the number of available apartments later. Investors evaluating new construction need to balance today’s leasing conditions against the longer period required to entitle, finance and build a property.
Employment remains the key risk
The company cautioned that its outlook assumes the labor market remains broadly stable. A shift from slow hiring to meaningful job losses could weaken household formation and demand for apartments. Persistent inflation could also prompt renters to move into less expensive units, share housing or delay establishing separate households.
Those qualifications make this a forecast, not a guarantee. The next useful tests will be observed vacancy, effective rents, concessions and completions across major metros as 2026 ends. Regional differences may be substantial even if the national averages follow the predicted path.
