While negative news about war in the Middle East, high gas prices, intractable inflation and a slowing economy can be found in abundance, fundamentally the U.S. economy and the rental housing sector remains resilient, according to Apartment Market Pulse Q1 2026. This quarterly review from the National Apartment Association (NAA), written by George Ratiu, NAA’s vice president of research, and Eri Bajomo, NAA’s manager of industry research, provides insights on the economic outlook, employment trends and multifamily trends.
According to the report, “The primary takeaway is that the economy remained resilient despite unpredictable tariff-centered trade negotiations, geopolitical volatility and inflationary pressures. That said, the first three months of this year tested many assumptions about the outlook as hostilities in the Middle East led to secondary-order effects like oil prices spiking above $100 per barrel, reigniting inflationary flames. The dynamic of soft growth alongside firming inflation has created a more challenging macroeconomic mix echoing early-stage inflationary conditions.”
Slow Growth and the Return of Inflation
During the first quarter of 2026, Americans felt the impact of higher prices for housing, gas, medical care, food and electricity, according to the report. GDP for 2025 was revised to 2.1% growth over 2024, but during the fourth quarter of 2025 and the first quarter of 2026, the authors said, “the pace of spending and investments was slower than expected and offset by weaker exports and government spending.”
Inflation is anticipated to stay elevated even as the economy slows, which is why the Federal Reserve has so far in 2026 held rates steady. Mortgage rates dipped slightly then surged again to 6.5% in late April 2026.
Employment Subdued
As the report describes it, the job market settled into a “low-hire, low-fire” mode, with unemployment remaining at 4.3% at the end of March. The researchers found that over the past year jobs reports have followed an up-and-down pattern, indicative of the uncertainty of the economy in the face of tariff disruptions, war in the Middle East, the unknown impact of AI, and volatility in financial markets. Jobless claims are historically low, which is a positive sign for the economy since it indicates that even if firms are not hiring, they’re not laying off large numbers of employees.
However, while the job market appears to be relatively stable, the ratio of job openings to unemployed workers has tightened, according to Ratiu and Bajomo’s research. In February 2026, there were 6.9 million open jobs, compared to an average of 7.7 million job openings in 2024 and 7.1 million openings in 2025.
A positive economic indicator is that wage growth is ahead of inflation, although by a smaller margin than in previous years.
Consumer confidence, which can also impact multifamily fundamentals, is cautious and reflects the K-shaped economy, according to the report. Consumer spending, which is an important foundation of the U.S. economy, appears to be losing momentum due to slower wage growth and higher costs.
Apartment Fundamentals
During the second half of 2025 and in the first quarter of 2026, apartment demand declined and so did absorption rates, according to the report. Annual absorption rates peaked at more than 784,000 units in the second quarter of 2025 before dropping to an annual rate of 303,000 units in the first quarter of 2026, a 58% year-over-year decline. New supply trended downward in the first quarter of 2026 by 37% compared to the first quarter of 2025.
Rent growth moderated in the first quarter of 2026, with data from RealPage indicating annual rent growth of 1.7%, while CoStar reported a slight negative rent growth of -0.1%. Generally, the report anticipates a flat pricing environment with uneven gains across various markets.
Occupancy rates have held steady, within a healthy range. RealPage data showed 94.9% occupancy during the first quarter of 2026, while CoStar data was lower at 91.5%.
Capital markets improved during most of 2025, according to the report, but contracted in both transaction volume and pricing during the first quarter of 2026.
Market Variations
Despite slower national numbers, rent growth was strong in a variety of locations during the first quarter of 2026, including:
- San Francisco, Calif.: up 7.6%
- San Jose, Calif.: up 4.7%
- Fort Wayne, Ind.: up 4.4%
- Honolulu, Hawaii: up 4.3%
- Norfolk, Va.: up 4.2%
On the other hand, some markets saw rent declines, particularly those that had high growth in previous years, including:
- Fort Myers, Fla.: down 9.1%
- Sarasota, Fla.: down 8.2%
- Tampa, Fla.: down 4.4%
- Asheville, N.C.: down 5.6%
- Austin, Texas: down 4.8%
- Denver, Colo.: down 4.7%
2026 Outlook
Generally, Ratiu and Bajomo anticipate a stable multifamily sector nationally, with variations depending on local supply and demand dynamics, particularly the ability to absorb supply and maintain occupancy levels. Despite softening rent growth, it remains positive on an annual basis. Occupancy levels and leasing activity remain healthy. Overall, moderating demand, easing supply levels and a more cautious investment environment will characterize the stable sector in 2026, with muted development activity and transaction volume.
The information provided in this article, including, without limitation, any opinions, predictions, forecasts, commentaries or suggestions, is for informational purposes only and should not be construed to be professional or personal investment, financial, legal, tax or other advice.