--- title: Apartments at Midyear 2026:
The Supply Wave Is Receding, but the Recovery Is Uneven description: What is the outlook for apartment real estate for the rest of the year? Learn more in this blog post by FGG1031. image: https://blog.fgg1031.com/hubfs/Apartments.png --- [info@firstguardiangroup.com](mailto:) [(866)398-1031](tel:(866)398-1031) [![fgg](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/fgg.png)](https://brokercheck.finra.org/individual/summary/6470002) [![fgg-871923](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2023/fgg-871923.png)](https://www.bbb.org/us/ca/san-jose/profile/commercial-real-estate/first-guardian-group-1216-887513) [![logo](https://blog.fgg1031.com/hs-fs/hubfs/FirstGuardianGroup_2022/logo.png?width=175&height=56&name=logo.png "logo")](http://fgg1031.com) - [Home](https://fgg1031.com/) - [About Us](https://fgg1031.com/about-us/) - [Current Offerings](https://fgg1031.com/property-listings-directory/) - [Resource Center](https://fgg1031.com/resource-center/) - [Glossary](https://fgg1031.com/glossary/) - [Accommodators](https://fgg1031.com/accommodators/) - [FAQ](https://fgg1031.com/faqs/) - [Tax eBook](https://pages.fgg1031.com/resources/real-estate-tax-deferral-strategies-ebook) - [Real Estate eBook](https://pages.fgg1031.com/real-estate-investing-in-the-new-era2) - [QI eBook](https://pages.fgg1031.com/resources/qualifiedintermediary/ebook) - [Tax Calculator](https://fgg1031.com/tax-calculator/) - [Newsroom](https://fgg1031.com/newsroom/) - [Blog](https://blog.fgg1031.com/blog) - [Events](https://fgg1031.com/events/) - [Contact Us](https://fgg1031.com/contact/) ![search-interface-symbol](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/search-interface-symbol.png) ![loader](https://f.hubspotusercontent-eu1.net/hubfs/24949188/Business%20and%20Finance/global/22.gif) ![close](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/close.png) From Pages From Blog Pages Load More Load More **Sorry, we couldn't find a match for  "".** Check your spelling or try a related search term. [![Register](https://no-cache.hubspot.com/cta/default/5468919/d02a3ee4-7db2-4d64-b925-a6ebbfe26664.png)](https://cta-redirect.hubspot.com/cta/redirect/5468919/d02a3ee4-7db2-4d64-b925-a6ebbfe26664) ![blog-template-banner](https://blog.fgg1031.com/hs-fs/hubfs/Blog%20Banner/blog-template-banner.png?width=1920&name=blog-template-banner.png "blog-template-banner") # Blog ### Subscribe to Our Blog ### Subscribe to Email Updates ## Featured Post   [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) ## [2026 Top Misconceptions - 1031 Exchanges](https://blog.fgg1031.com/blog/2026-top-misconceptions-1031-exchanges) We are pleased to share this guest blog post by IPX 1301. Every year, thousands of real estate investors use Section 1031 of the Internal Revenue Code t\[...\] [Real Estate Investors](https://blog.fgg1031.com/blog/topic/real-estate-investors) [1031 Exchange](https://blog.fgg1031.com/blog/topic/1031-exchange) [Read More](https://blog.fgg1031.com/blog/2026-top-misconceptions-1031-exchanges) ## Recent Posts [Real Estate Investors](https://blog.fgg1031.com/blog/topic/real-estate-investors) [Opportunity Zones](https://blog.fgg1031.com/blog/topic/opportunity-zones) # Apartments at Midyear 2026:
The Supply Wave Is Receding, but the Recovery Is Uneven By [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) Demand is improving and the construction pipeline is shrinking. Yet rent growth remains muted, concessions are common, and the strongest opportunities increasingly depend on market selection, property basis, and financing. **The midyear message is neither “boom” nor “bust.”** For the first time in several years, the national apartment data is beginning to show the outline of a healthier supply-demand balance. New deliveries are falling, renter demand strengthened in the second quarter, and vacancy is beginning to ease in many markets. But the recovery is not broad, uniform, or yet powerful enough to restore strong rent growth everywhere. ![Screenshot 2026-08-27 at 11.07.32 AM](https://blog.fgg1031.com/hs-fs/hubfs/Screenshot%202026-08-27%20at%2011.07.32%20AM.png?width=1284&height=244&name=Screenshot%202026-08-27%20at%2011.07.32%20AM.png) #### **1. Apartment Demand Regained Momentum** Demand improved meaningfully as the spring leasing season progressed. Cushman & Wakefield reported approximately 124,600 units of net absorption in the second quarter, up from a revised 83,500 units in the first quarter and 8% above the same quarter of 2025. First-half absorption reached about 208,000 units, slightly exceeding the 167,700 units delivered during the same period.¹ CBRE’s separate Q1 dataset pointed in the same direction: 78,100 units were absorbed while only 58,100 units were completed, vacancy fell 20 basis points during the quarter, and 63 of the 69 tracked markets posted positive absorption. The exact numbers differ by provider, but both datasets show improving demand relative to new supply.² ![Screenshot 2026-08-27 at 11.09.32 AM](https://blog.fgg1031.com/hs-fs/hubfs/Screenshot%202026-08-27%20at%2011.09.32%20AM.png?width=1328&height=584&name=Screenshot%202026-08-27%20at%2011.09.32%20AM.png) The improvement is noteworthy because job growth, immigration and population growth have all moderated. Apartment demand is being supported by household formation, the high cost of homeownership, smaller household sizes, and renters remaining in apartments longer than they might have in a lower-rate environment. That demand is real, but it has not yet translated into broad pricing power. #### **2. The Supply Wave Is Receding - and That Matters** The strongest fundamental improvement is occurring on the supply side. RealPage estimates that annual apartment deliveries peaked near 588,000 units in late 2024 and declined to approximately 340,200 units in the year ending Q2 2026 - a reduction of roughly 42%. Quarterly deliveries have now declined for six consecutive quarters on an annualized basis.³ ![Screenshot 2026-08-27 at 11.10.37 AM](https://blog.fgg1031.com/hs-fs/hubfs/Screenshot%202026-08-27%20at%2011.10.37%20AM.png?width=1318&height=574&name=Screenshot%202026-08-27%20at%2011.10.37%20AM.png) Cushman & Wakefield reported about 475,000 units under construction at midyear, equal to 3.5% of existing inventory. That is less than half the 7.9% peak reached in early 2023 and the lowest construction share since 2013. First-half starts totaled roughly 110,000 units, the lowest since 2012.¹ This does not mean every market is immediately clear of excess supply. Recently delivered communities may take another year or more to stabilize, and concessions can remain elevated long after construction slows. Still, the direction is increasingly favorable for existing properties: fewer starts today mean fewer lease-up competitors in 2027 and 2028. #### **3. Rent Growth Is Positive in Some Datasets - but Still Weak** The national rent story depends on the source, but the common conclusion is clear: revenue growth remains subdued. Cushman & Wakefield measured 1.5% year-over-year asking-rent growth in Q2. Yardi Matrix reported only 0.2% annual advertised-rent growth in June, with the national average at $1,763. RealPage measured effective asking rents 0.2% below the prior year. These series use different samples and definitions, but none indicates strong national pricing power.¹ ³ ⁴ ![Screenshot 2026-08-27 at 11.12.24 AM](https://blog.fgg1031.com/hs-fs/hubfs/Screenshot%202026-08-27%20at%2011.12.24%20AM.png?width=1310&height=538&name=Screenshot%202026-08-27%20at%2011.12.24%20AM.png) Yardi’s seasonal comparison is particularly revealing. Advertised rents rose 0.7% during Q2 and 1.0% in the first half of 2026, well below the pre-pandemic seasonal averages of 1.8% and 2.7%, respectively. Leasing activity is healthy, but owners are still choosing occupancy over aggressive rent increases.⁴ Concessions reinforce that point. RealPage reported that 24.6% of apartments were offering concessions at midyear, with the average concession equal to 7.6%. Occupancy improved to 95.5%, but widespread discounts mean the recovery in effective revenue is lagging the recovery in heads-in-beds.³ #### **4. National Averages Hide a Two-Speed Market** The apartment market is becoming more geographically differentiated. Within Cushman & Wakefield’s coverage universe, Q2 vacancy stood at 5.1% in the Northeast, 8.0% in both the Midwest and West, and 11.0% in the South. The South continues to account for the largest share of both apartment demand and construction, but its heavier supply burden is still suppressing rents and elevating vacancy.¹ ![Screenshot 2026-08-27 at 11.14.48 AM](https://blog.fgg1031.com/hs-fs/hubfs/Screenshot%202026-08-27%20at%2011.14.48%20AM.png?width=1360&height=554&name=Screenshot%202026-08-27%20at%2011.14.48%20AM.png) ![Screenshot 2026-08-27 at 11.15.02 AM](https://blog.fgg1031.com/hs-fs/hubfs/Screenshot%202026-08-27%20at%2011.15.02%20AM.png?width=1296&height=558&name=Screenshot%202026-08-27%20at%2011.15.02%20AM.png) Coastal technology markets and several supply-constrained Midwest and Northeast metros are showing the strongest pricing. Cushman & Wakefield reported year-over-year asking-rent growth of 13% in San Francisco, 7% in San Jose, 5.6% in Norfolk and 4.8% in the East Bay. At the other end of the spectrum, Sarasota and Austin were still posting rent declines, although both have improved materially from their worst readings.¹ Investors should not interpret strong absorption in a high-supply market as proof that rent growth will immediately follow. Dallas-Fort Worth, Phoenix, Atlanta and Austin were among the leaders in first-half absorption, but those markets also added large amounts of new inventory. The most important local question is not simply “Is demand growing?” It is “Is demand growing faster than the remaining competitive supply?” **THE LOCAL-MARKET TEST:** A metro can report strong demand and still produce weak property-level revenue if lease-up competition, concessions, or an unfavorable basis absorb the benefit. Investors should evaluate the true competitive submarket, not rely on a national or metro headline. #### **5. The Rent-versus-Own Gap Remains a Structural Tailwind** Newmark estimated that owning a home cost approximately $1,040 more per month than renting in Q1 2026 - about 2.4 times the long-term average spread. Elevated mortgage rates, high home prices, property taxes, insurance and limited entry-level inventory continue to delay the move from renting to owning. This affordability gap is one of the strongest supports for apartment demand. It does not guarantee rapid rent growth, because renters are also sensitive to inflation and income growth. But it reduces move-outs to home purchase and expands the period during which many households remain renters. That is particularly valuable while the market absorbs the final stages of the recent construction cycle.⁵ #### **6. Capital Markets Are Thawing, Not Fully Normalized** Financing conditions have improved more rapidly than transaction activity. Newmark reported that multifamily debt originations increased 46% year over year in Q1 2026, signaling stronger lender liquidity. CBRE, however, reported Q1 multifamily investment volume of $29.5 billion, down 6% from a year earlier. Stabilized assets can attract debt, but buyers and sellers remain selective and pricing expectations are still adjusting.² ⁵ ![Screenshot 2026-08-27 at 11.17.49 AM](https://blog.fgg1031.com/hs-fs/hubfs/Screenshot%202026-08-27%20at%2011.17.49%20AM.png?width=1312&height=204&name=Screenshot%202026-08-27%20at%2011.17.49%20AM.png) CBRE’s broader 2026 capital-markets outlook anticipated healthy debt availability, tight lending spreads and modest cap-rate compression for high-quality assets, while emphasizing that returns would be driven primarily by income rather than rapid valuation gains. That remains a useful discipline at midyear: the investment case should work based on current operations and realistic improvements, not on a quick return to the ultra-low-rate pricing of the last cycle.⁶ #### **What Apartment Investors Should Ask in the Second Half of 2026** **![Screenshot 2026-08-27 at 11.18.44 AM](https://blog.fgg1031.com/hs-fs/hubfs/Screenshot%202026-08-27%20at%2011.18.44%20AM.png?width=1356&height=406&name=Screenshot%202026-08-27%20at%2011.18.44%20AM.png)** #### **The Midyear Conclusion** Apartment fundamentals are moving in the right direction, but “apartments” should not be treated as a single national trade. The supply pipeline is shrinking, demand is resilient and the homeownership affordability gap remains supportive. At the same time, rent growth is weak, concessions remain common and the recovery varies widely by market and submarket. For 1031 exchange and DST investors, apartment properties may continue to play an important role in a diversified replacement-property strategy. The more important decision is which apartment investment: at what basis, in which submarket, with what remaining supply, what financing, what sponsor assumptions, and what current annualized cash flow. #### **A Disciplined Investment Lens** FGG1031 | First Guardian Group uses the FGG Compass analytical process to compare offerings across market fundamentals, sponsor experience, leverage, current cash flow, potential appreciation and downside risks. A favorable national trend can help, but careful property-level underwriting remains the difference between a strong apartment thesis and a strong apartment investment. For more information, contact us at [info@firstguardiangroup.com](mailto:info@firstguardiangroup.com).  --- **Sources and Research Reviewed** 1. Cushman & Wakefield, “Q2 2026 U.S. Multifamily MarketBeat,” July 2026. 2. CBRE, “Q1 2026 U.S. Multifamily Figures,” April 28, 2026. 3. RealPage Market Analytics, “2nd Quarter 2026 Data Update,” July 6, 2026. 4. Yardi Matrix, “Multifamily National Report - June 2026.” 5. Newmark, “1Q26 U.S. Multifamily Capital Markets Conditions & Trends,” May 14, 2026. 6. CBRE, “U.S. Real Estate Market Outlook 2026 - Capital Markets.” 7. JLL, “Global Real Estate Perspective,” May 2026 (capital-markets and living-sector context). 8. National Multifamily Housing Council, “Quarterly Survey of Apartment Conditions,” April 2026. ### [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) Paul M. Getty is one of the most experienced 1031 exchange specialists in the United States, with a career in real estate that spans over 35 years and more than $5 billion in commercial transactions across every major asset class. His work covers single-family rentals, apartments, retail, office, multifamily, and student and senior housing, giving him a practical understanding of how different property types perform across market cycles and how investors can move between them using tax-deferred exchange strategies. As President and CEO of FGG1031 | First Guardian Group, Paul advises investors through the full 1031 exchange process, from identifying qualifying replacement properties to structuring acquisitions through Delaware Statutory Trusts (DSTs) and wholly owned real estate. His guidance covers both the compliance requirements of a valid exchange and the investment decisions that determine long-term portfolio outcomes – a combination that is difficult to find in a single advisor. Paul holds a California and Texas real estate broker license and carries Series 22, 62, 63, and 82 securities licenses as a registered representative with Emerson Equity LLC, member FINRA /SIPC. He has represented buyers and sellers across complex commercial transactions, sourced and structured debt and equity, and worked alongside nationally recognized firms including Marcus Millichap, CBRE, JP Morgan, and Morgan Stanley. Before founding FGG1031, he co-founded Venture Navigation, a boutique investment banking firm whose M&A and IPO activity generated over $700 million in investor returns. Paul holds an MBA in Finance from the University of Michigan and a bachelor’s degree in chemistry from Wayne State University. He has also completed coursework in artificial intelligence at Stanford University. He is the author of four books on real estate investing and tax deferral strategy, including Tax Deferral Strategies Utilizing the Delaware Statutory Trust (DST) and Real Estate Investing in the New Era, both available on Amazon. A frequent speaker on 1031 exchanges, DST investing, and real estate tax strategy, Paul Getty is a recognized voice for investors and advisors seeking guidance on capital preservation through tax-deferred real estate investment. ## Your Comments : This is a search field with an auto-suggest feature attached. - There are no suggestions because the search field is empty. - Latest Posts - Popular Posts [Apartments at Midyear 2026:
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There is no secondary market for these investments; - Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions; - Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits No offer to buy or sell securities is being made. Such offers may only be made to qualified accredited investors via private placement memorandum. Risks detailed in a private placement memorandum should be carefully reviewed, understood and considered before making such an investment. Prospective strategies and products used in any tax advantaged investment planning should be reviewed independently with your tax and legal advisors. Changes to the tax code and other regulatory revisions could have a negative impact upon strategies developed and recommendations made. Past performance and/or forward looking statements are never an assurance of future results. Many of the investments offered will be only available to those investors meeting the definition of an Accredited Investor under SEC Rule 501(A) and offered as Regulation D private placement securities via a Private Placement Memorandum (“PPM”). Prospective investors must receive, read and understand all of the risks associated with buying private placement securities. Investments are not guaranteed or [FDIC](http://fdic.org/) insured and risks may include but are not limited to illiquidity, no guarantee of income or guarantee that all tax advantages or objectives will be met and complete loss of principal investment could occur. **Risk Disclosure:** Alternative investment products, including real estate investments, notes & debentures, hedge funds and private equity, involve a high degree of risk, often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop. There may be restrictions on transferring interests in any alternative investment. Alternative investment products often execute a substantial portion of their trades on non-U.S. exchanges. Investing in foreign markets may entail risks that differ from those associated with investments in U.S. markets. Additionally, alternative investments often entail commodity trading, which involves substantial risk of loss. NO OFFER OR SOLICITATION: The contents of this website: (i) do not constitute an offer of securities or a solicitation of an offer to buy of securities, and (ii) may not be relied upon in making an investment decision related to any investment offering by FGG1031 | First Guardian Group, Emerson Equity LLC, or any affiliate, or partner thereof. FGG1031 | First Guardian Group does not warrant the accuracy or completeness of the information contained herein. Copyright 2026, All Rights Reserved, FGG1031