Tracking the turnaround: Recovery of multifamily market builds unevenly across US Article originally posted on CoStar on June 23, 2026 The U.S. apartment market is beginning to stabilize as supply pressures ease, with improving conditions emerging in a growing number of markets. A new update to CoStar’s multifamily momentum index shows where improvements are occurring most quickly, highlighting markets where apartment vacancy is falling, renter demand is catching up, and supply pressures are beginning to recede. To better understand where market momentum is building, CoStar’s analytics team recently updated its multifamily momentum index. Introduced a year ago, the index ranks multifamily markets based on year-over-year changes in rent growth, vacancy, the balance between demand and new supply, and the under-construction pipeline relative to market inventory. Rather than identifying the strongest markets, the index highlights where conditions are gaining ground fastest. Results from the latest ranking underscore how changes in conditions are unfolding unevenly across markets. Notably, easing supply pressure in several of the top-ranked markets has not yet translated into rent growth. Six of the top 10 markets are still posting annual rent declines, reinforcing that the index measures the pace of improvement rather than current performance. The U.S. multifamily market entered 2025 with expectations of a broad recovery, as the peak in new construction moved into the rear view and demand remained strong. Instead, softer employment growth weighed on household formation, leaving apartment demand weaker than expected as the year progressed. Now, midway through 2026, the sector continues to work through those effects, while demand remains more measured amid an uneven employment backdrop. While the number of apartments under construction is still elevated in many markets, the construction pipeline is thinning, allowing demand to catch up with supply. Completions are expected to decline meaningfully from recent peaks over the course of this year. Vacancy has begun to stabilize in many areas, and rent trends, while still negative in many markets, are improving as declines moderate. Pace of improvement varies across markets Still, the pace of changing conditions varies across markets. Some U.S. markets are already seeing renewed pricing power and tightening occupancy, while others are only beginning to emerge from elevated supply pressure. Against that backdrop, a growing number of markets stand out for the pace at which conditions are improving. Among the highest-ranked markets, Austin, Texas, stands out as a clear example of how quickly conditions can change. Apartment rents are still declining on an annual basis, but the pace of rent declines has slowed meaningfully. Vacancy is trending lower, and a sharp pullback in construction has allowed demand to begin closing the gap with supply. “The story in Austin right now is really about supply normalizing,” said Israel Linares, senior market analyst for CoStar. “Deliveries fell about 44% last year and are projected to drop another 40% or so this year, which is allowing demand to catch up more quickly and easing pressure on vacancy and rents.” In Northern California, momentum is concentrated in the Bay Area rather than across the broader Pacific region. San Francisco, San Jose and the East Bay rank among those seeing the strongest momentum, reflecting a rebound in demand following earlier declines. Rent growth and vacancy have improved notably, pointing to renewed pricing power, while increases in the construction pipeline remain modest. Outside of Northern California, momentum across the Pacific region is more limited, with most markets ranking in the middle or lower half of the index. “Demand across the Bay Area, and especially in San Francisco, has come back quickly, particularly in neighborhoods tied to tech and AI-related hiring, and that’s happening against a backdrop of very limited new supply,” said Nigel Hughes, senior director of market analytics at CoStar. “With apartment vacancy already near historic lows, that combination is allowing rents to push higher at a much faster pace than in most other markets.” Rent declines moderate as supply ‘normalizes’ In the South, both large and mid-sized markets continue to feature prominently in the index. Jacksonville, Florida, ranks among the top performers, with strong improvements in occupancy and the balance between demand and supply. Apartment vacancy in Jacksonville has declined by roughly 170 basis points over the past year, while rents remain slightly negative, highlighting improving conditions as supply pressures ease. Atlanta, a key bellwether for the region, also appears among the leading markets, while Raleigh, North Carolina, continues to rank highly. While rents continue to decline in both markets, the pace of declines has moderated. “Atlanta has been able to absorb new supply at a pace few other markets can match,” said John Gillem, senior director of market analytics for CoStar. “It consistently ranks among the top markets for both total absorption and absorption as a share of inventory, which reflects the strength and durability of demand tied to migration and employment growth.” Momentum varies by region, reflecting each market’s position in the current supply-demand cycle. In areas where demand rebounded earlier and more sharply, such as the San Francisco Bay Area, much of the recovery in apartment occupancy has already occurred, leaving less room for further acceleration, even as supply remains limited. In contrast, high-growth markets in the South stand out for their recent momentum. Austin, Jacksonville, Atlanta, and Raleigh are rising in the momentum rankings as supply pressures ease and demand catches up. While rent growth remains negative in most of these markets, declines have moderated and vacancy is beginning to fall, signaling early-stage normalization. Mountain region markets such as Phoenix and Denver are showing more moderate but consistent progress. In Phoenix, supply pressure has eased materially over the past year, with the under-construction pipeline declining from 6.6% of inventory to 4.0%, a 2.6 percentage point drop. In Denver, the gap between new supply and demand has narrowed from more than 2% of inventory last year to just 0.2%, signaling a much more balanced market. Midwestern multifamily markets provide a distinct contrast. Apartment market conditions have remained relatively stable, with lower construction levels limiting increases in vacancy. While markets such as Milwaukee have shown improvement, most of the region ranks lower on a momentum basis because conditions have changed less. A similar dynamic is playing out across the Northeast. More balanced supply conditions have led to fewer swings in vacancy and rent trends, resulting in fewer outsized gains in the momentum rankings, while underlying market conditions remain comparatively solid. Momentum is showing up in different ways depending on the market. In some areas, strong demand for apartments is restoring pricing power. In others, a slowdown in construction is helping ease supply pressure and stabilize the market, even as rents continue to decline. In still others, long-standing supply constraints are limiting the degree of change. For market participants, understanding how and why conditions are improving — and where those improvements are likely to translate into stronger fundamentals — may be as important as identifying where they are occurring. As the construction pipeline continues to decline, many U.S. apartment markets are showing early signs of improvement and are likely to see further strengthening in fundamentals in the coming quarters.