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Multifamily fundamentals are finally breaking in landlords’ favor, as new supply falls, vacancies retreat from their cyclical peak and absorption outpaces deliveries for the first time in years, according to Cushman & Wakefield’s latest Marketbeat report for 2Q 2026.
For commercial real estate investors who have spent the last several years watching an overbuilt pipeline erode pricing power, the data points to a market that is moving into a more balanced, income-supportive phase.
Vacancies Retreat As Supply Pipeline Thins
For the first time in two years, national multifamily vacancy has dropped meaningfully as the construction pipeline dries up and demand strengthens, ending a long stretch in which owners had to cut rents or offer concessions to fill units, according to Cushman & Wakefield. Increased demand pushed vacancy below 9% for the first time since 2024, falling 35 basis points to 8.9% compared with the first quarter and the firm notes that the vacancy rate “appears to have reached its cyclical peak, assuming demand remains reasonably healthy.”
The shift in balance is visible in the relationship between absorption and deliveries. On a trailing four-quarter basis, absorption of roughly 362,000 units has finally exceeded deliveries of approximately 358,000 units, a reversal from the supply‑heavy pattern that has defined the market since early 2022, Cushman & Wakefield reports.
Net multifamily absorption totaled 124,600 units in the second quarter alone, well above the 83,500 units absorbed in the first quarter and 8% higher than the same period in 2025, underscoring that demand is rebuilding even against a challenging macro backdrop of subdued job growth, low immigration and slowing population gains.
Sunbelt Strength And Construction Pullback
Regionally, the South is leading the recovery with 65,907 units absorbed in the quarter, more than double the West’s 27,317 units and well ahead of the Northeast’s 15,746 units and the Midwest’s 15,587 units, according to Cushman & Wakefield. At the metro level, absorption has been highest in Sunbelt markets such as Dallas/Fort Worth (18,600 units), Phoenix (17,000), Atlanta (13,300) and Austin (13,200). Elsewhere, New York stood out and led the nation with 19,500 units absorbed.
The demand rebound is being amplified by a pronounced slump in new construction as developers step to the sidelines. Cushman & Wakefield reports that deliveries fell 27% year-over-year, with just 88,000 units delivered in the quarter—the lowest tally since 2022 and construction activity is at its lowest level in 13 years at 3.5% of inventory.
About 475,000 units were under construction at the end of the second quarter, but the pipeline points to further declines in new supply through 2027, giving owners in overbuilt markets more time to work down vacancy and stabilize occupancy.
The slowdown in development is being driven by a mix of capital‑market and cost pressures. Higher financing costs, elevated construction expenses and more selective capital are all limiting new starts, according to Cushman & Wakefield.
“Development activity is likely near its cyclical trough,” the firm states, noting that first‑half starts totaled roughly 110,000 units, the lowest level since 2012, and that the pipeline indicates additional declines ahead.
Rent Growth Begins To Stir, With Standout Markets
With vacancy tightening and new construction curtailed, rent growth is showing early signs of life, although Cushman & Wakefield describes it as “soft” in absolute terms. National asking rents rose 1.5% year-over-year in the second quarter, up from 1.1% growth in the first quarter, and the firm expects that continued vacancy compression will allow rent growth to strengthen in the year ahead even as pricing power trails the occupancy recovery.
Several metros are already posting outsized gains. San Francisco recorded a 13% year‑over‑year increase in asking rents, while San Jose rose 7% and the East Bay climbed 4.8%, according to Cushman & Wakefield. Outside the Bay Area, markets such as Norfolk (5.6% rent growth), Toledo (4.4%) and Reno (4.2%) have benefited from a combination of limited new supply and steady demand, producing above‑trend rent increases over the past year.
Some of the most notable changes in rent‑growth momentum are occurring in markets that had been among the most oversupplied in the recent cycle. Cushman & Wakefield points to Sarasota, Austin, Charleston, Colorado Springs and Boise as markets where the rate of rent growth has shifted rapidly, reflecting the impact of falling deliveries and recovering demand in former lease‑up‑heavy metros. For investors, these markets highlight how quickly conditions can normalize once the pipeline slows and absorption begins to catch up.
Even as the market works through its remaining challenges, Cushman & Wakefield sees signs that a new wave of development will follow once the current recovery is further along.
“Early signs suggest institutional capital is re‑engaging, with developers underwriting projects to deliver three to four years out, when new assets will likely face less lease‑up competition,” the report notes, suggesting that today’s window of tightening vacancy and gradually improving rent growth is already informing the next round of capital deployment.
