State-of-the-Industry Report Issued at the annual Multifamily Housing Summit
As the rental housing industry looks ahead to 2026, the Austin Apartment Association today issued a State-of-the-Industry, including national housing and multifamily market trends, insights into the local economy, local and regional area construction and development activity, and industry forecasts.
Moderator Alvino Rosales of Costar opened the program, noting “Nationally and locally, the industry has experienced some pivotal moments, with the past few years being atypical of historical trends in the rental housing and multifamily sectors.”
A wait-and-see approach from investors is evident as they seek a clear path forward on job market strength and the pace of new pipeline absorption.
National expert Kimberly Byrum of Zonda reported on national apartment market trends, highlighting the realities of the capital markets and their impacts on the industry, both nationally, regionally, and locally.
National benchmarks reflect a volatile year for debt costs, resulting in multifamily lending below last year’s levels nationally. Much interest is focused on the possibility of federal rate cuts, which would not only impact the home-buying market but also multifamily financing, spurring additional investment and transactions. Byrum noted, “There is a desire, but equity is holding. There isn’t as much ‘coming to the table’ for deals due to equity’s risk aversion.” While market investors are approaching cautiously, “There are opportunities in specific submarkets. Negative leverage is oftentimes underwritten when there's a strong belief in future rent appreciation.”
Returning to a Market Equilibrium
Byrum also summarized national economic projections, which indicate that overall job growth nationally will continue on the same trend as 2025, at a rate of 0.7%. These projections may reflect the “dismal science” of the forecast, Byrum noted; nonetheless, it is expected that U.S. occupancy will moderate in the 94% range.
“This allows for getting closer to equalization.” Equalization occurs when the job market growth is averaging between 1.5% and 3%, and national multifamily housing construction is 400,000 units delivered. While in 2024, deliveries exceeded 600,000, it is notable that historically, the U.S. has not delivered that level of rental housing units annually.
Much attention has been paid to the construction pipeline nationally. Byrum reports that “The pipeline is past the peak and falling. However, there is still excess supply that is working through the market from the year before, and the year before that.”
Bright spots include larger flagship markets, of which Austin is one. “They are righting the ship faster,” says Byrum. Other large markets, such as Dallas, Atlanta, and Charlotte, although still experiencing excess inventory, will lead the recovery.
Austin is a resilient market, well-positioned with an educated, diversified, creative, and innovative workforce.
Vice President of Angelou Economics, Matt Patton, provided an Austin regional economic overview and forecast.
“We are no longer an ‘up-and-comer type of market,’ we are a top market, nationally. Austin has strong regional economic indicators, such as a projected job growth rate of 2.1% which outpaces the 1.7% population growth. “There are opportunities for those moving to the area, or those already here,” states Patton.
Regionally, the Austin economy is estimated to experience 50% or more GDP growth over the next five years. “We have weathered storms and experienced a growth rate, still topping the list of fastest growing metros.” Estimates are that GDP growth will result in a GDP estimate for the Austin MSA of $330B in 2030.
Population shifts and demographics are also driving multifamily demand here in Greater Austin. “There is a continued net in-migration that is supported by strong international immigration flows, and that drives household formation and fuels rental demand in our market.”
Migration and the prevalence of colleges and universities in our region will continue to produce a college-educated workforce. “Austin, at 51.9% of the workforce that is college educated, compared to 34.3% nationally, has a power that exists here and sets Austin apart. That is what keeps me confident about the Austin market.”
Furthermore, the distribution of employment across industries is vital to the health of our economy, and Austin has a very diversified workforce.
External factors such as the semiconductor industry surge, geopolitical dynamics, emerging space economy, as well as the anchors such as the tech and healthcare sectors, all will continue to drive multifamily demand.
“Multifamily demand in Austin is multi-sectoral and location-specific, requiring strategic alignment with emerging advanced industry corridors.”
Transportation and infrastructure development are also key factors impacting the state of the multifamily industry. The development of build-to-rent communities and investment in retail, industrial, and mixed-use properties will be driven by transportation and infrastructure projects. “These investments improve commute reliability, which results in higher land values and better opportunities at those key development locations.”
Key to the continued resilience is the in-migration of the population, which infrastructure investment, such as the Airport expansion, supports. “ABIA is the ‘front porch’ of Austin, and continuing to invest in the Austin experience will benefit the community long term.”
Two key demographics – the young STEM professionals who are seeking the urban core and those amenities and connectivity, as well as the middle-income families who are driving development demand in Hays County and Southwest Williamson County.”
These distinct renter cohorts are shaping the multifamily market and development in our region. Design, amenities, and location strategy will continue to be driven by these demographic trends.
Construction Bubble
By definition, Austin has been experiencing a “supply bubble,” which is an excessive supply leading to oversaturation. “When you simultaneously combine lower job growth with higher supply, you have a construction bubble.”
Trends over time have positioned Austin in a more balanced market, where units delivered have been more closely matched with units absorbed, ranging from 8,000 to 13,000 units annually.
The COVID pandemic and the subsequent real estate market have created a flurry of activity and interest, with the number of units delivered annually ranging from nearly 17,000 to 30,000.
Occupancy is climbing from a valley, and absorption is catching up.
Cindi Reed, Director of North America Sales with MRI Software, provided a local overview of occupancy and absorption rates, noting that multifamily occupancy is beginning to shift. In recent weeks and months, it has improved to 86.2% as of today in the Austin metro.
Austin continues to experience negative rent growth (-6.8% year-over-year), which is higher than other major Texas metros and key southern and southeastern markets.
Concessions in the market are still prevalent, with nearly 75% of Class A properties offering a concession of some kind.
While this has improved occupancy, the ongoing concessions will not be sustainable in the long term.
For the rest of 2025, it is estimated that nearly 9K more units will be delivered through December.
Construction activity has been the highest in the various submarkets in the outlying metro, with some of those markets reporting a 65% average occupancy. “A lot is going on along [Highway] 130 – if you haven’t driven that in a while, go take a drive and see all of the new construction.”
Looking ahead to 2026, forecasts show that approximately 12K – 13K units are expected to be delivered in the Austin metro, following 2025, which is expected to end the year with 21,500 new units delivered.
Additionally, estimates suggest that the year will close out with an average occupancy rate of 87.1%, and the negative rent growth is expected to decrease to -5.8% by year-end.
Better years are coming.
Experts agreed that 2026 will be a year when we can possibly reach a market equilibrium, with continued projected job growth stronger than in 2025. This will result in an increased rate of multifamily unit absorption, coupled with an increase in occupancy as rent growth stabilizes and turns again to a growth pattern. In addition, the market will strengthen “sooner in the submarkets,” says Byrum, due to deliveries and demand.
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