Apartment Vacancy Rates Hit Record Highs as Rents Stall

Min 1:

Apartment vacancy rates hit record highs in early 2026 as supply overwhelmed demand.

The national multifamily vacancy rate reached 7.3% according to Apartment List—the highest level since the index launched in 2017.

Rents barely budged with the national average increasing to $1,716 in February—up just 0.1% from December's revised $1,714 figure.

Annual rent growth eased to 0.4% in February from 0.6% the prior month according to Apartments.com data released today.

Over 600,000 new multifamily units hit the market in 2024—the most new supply in a single year since 1986.

Another 500,000 delivered in 2025. That massive construction wave collided with sluggish demand from a shaky labor market.

Units are taking an average 41 days to lease after listing—four days longer than a year ago and another record high dating back to 2019. Landlords face more competition for tenants than any point in the past decade.

Min 2:

The numbers reveal landlords capitulating on pricing.

Metro-level performance eased across the U.S. in February with only 38 of the top 50 markets posting rent increases—down from 42 markets in January.

Month-over-month rent growth leaders were Richmond up 0.8%, San Jose up 0.6%, and Louisville up 0.6%. The steepest monthly declines hit Nashville down 0.2% followed by Charlotte, Tampa, Houston, Austin, Orlando, Seattle, and Orange County all down 0.1%.

Sun Belt markets face elevated vacancy amid aggressive new supply.

These same metros that boomed during pandemic now struggle with oversupply as developers who started projects years ago complete buildings into weakening demand.

If you're renting today, you're negotiating from strength unavailable since before pandemic.

Landlords offering concessions—first month free, waived fees, rent credits—just to fill vacant units sitting on the market over a month.

Min 3:

Compare renting versus buying and the financial equation shifted dramatically.

The median home price sits at $413,595 requiring over $106,000 in income to qualify. The median apartment rents for $1,716 monthly or $20,592 annually—accessible to households earning $70,000.

Rents fell 6.2% from their 2022 peak while home prices rose 53% since 2019.

A household earning $80,000 gets priced out of homeownership completely but qualifies easily for apartments with record-high vacancy giving negotiating leverage.

The stock market comparison favors rental property investors despite weak rent growth. REITs posted over 9% returns year-to-date through mid-February.

Multifamily operators buying at compressed cap rates lock in income from the 65% of households priced out of buying.

Buy apartments today at 7.3% vacancy and you're acquiring properties landlords desperately want to fill. Every vacant unit costs them money while you negotiate purchase prices below replacement cost from sellers facing negative cash flow.

Min 4:

Individual investors beat institutional funds when vacancy spikes.

Large operators face quarterly earnings pressure forcing them to maintain occupancy at any cost. You can be selective about properties and negotiate seller financing from distressed landlords.

Vacancy varies wildly by market creating opportunity. Northeast, Midwest, and parts of the West Coast see rising rents despite winter slowdowns.

You're targeting markets with positive fundamentals while Sun Belt oversupply creates acquisition discounts.

Small investors can negotiate directly with landlords offering year-long leases at fixed rents. Lock tenants in before spring competition when seasonal patterns typically accelerate rent growth.

You're filling units competitors leave vacant.

Risk exists that continued supply pressure extends the vacancy cycle. But 2026 deliveries will drop below 2025 levels.

Construction starts fell 20% in 2024 due to rising costs and financial constraints. The pipeline empties by late 2027.

Min 5:

Any investor can capitalize on record vacancy by acquiring properties from landlords facing negative cash flow.

These owners borrowed at lower rates expecting rent growth that never materialized—now they're underwater on debt service.

The combination of 7.3% vacancy and barely positive rent growth forces sellers. Banks pressure landlords to reduce debt or sell.

You're buying from motivated sellers willing to discount prices, offer seller financing, or accept creative terms to exit positions.

Small investors building multifamily portfolios can acquire value-add properties. Buy buildings at 40% vacancy in oversupplied Sun Belt markets, renovate units, and lease at market rates once supply normalizes in 2027-2028.

Studios rent fastest according to RealPage data—only 50% of new apartments lease within three months while studios fill quickly due to limited supply.

You're targeting smaller unit mixes that maintain occupancy while larger luxury buildings sit vacant.

Takeaway:

Apartment vacancy rates hit 7.3% in early 2026—the highest level since 2017 according to Apartment List.

Annual rent growth slowed to just 0.4% as over 600,000 new units delivered in 2024 and another 500,000 in 2025 overwhelmed demand.

Units take an average 41 days to lease after listing compared to 37 days a year ago.

Only 38 of the top 50 markets posted rent increases in February down from 42 in January as landlords competed aggressively for tenants.

Individual investors win because record vacancy creates motivated sellers. Landlords borrowed expecting rent growth that never happened—now they face negative cash flow and bank pressure to reduce debt or sell properties.

Sun Belt markets with the highest vacancy offer the deepest discounts. Buildings trading at 30-40% vacancy sell below replacement cost from owners unable to service debt.

You're acquiring properties that will stabilize once the supply wave ends by late 2027.

Move in the next 90 days to acquire multifamily properties from distressed sellers before vacancy peaks. Target markets with positive rent growth in the Northeast, Midwest, and West Coast, negotiate seller financing from owners needing exits, and focus on smaller unit types that lease fastest despite overall market weakness.

Wait until summer and the best distressed deals will already trade to faster-moving buyers capitalizing on the highest vacancy rates in nearly a decade.