Key Highlights:
- Multifamily fundamentals are improving, but rising rates are slowing the recovery. Supply is falling from the 2023–25 highs, while the Fed’s recent rate hike and a 10-year Treasury above 5% have added another hurdle for buyers and sellers trying to agree on pricing.
- Vacancy posted its first real improvement in almost four years, dipping 30 basis points in the second quarter, a sign the market may be starting to tighten. Austin was a standout, with vacancy down 2.9 percentage points over the year.
- Rent growth was nearly flat over the past year, but a second-quarter gain of 1.3% suggests momentum may be building. Driven by AI, San Francisco rents rose 12.9% year over year.
- Renting’s cost advantage keeps growing. Owning now costs more than twice as much as renting in Orange County, Los Angeles, San Diego and Seattle, and the gap is widening across the Sunbelt as well.
- Transaction activity has picked up in some markets. San Jose has been particularly active over the past six months, Los Angeles and Orange County have seen an uptick, and Fort Lauderdale, Austin and Nashville are the only Sunbelt markets outpacing the national trend.
