U.S. apartment demand roared back in the second quarter, driving the sharpest drop in vacancies in years as a cooling construction pipeline tightened the market. Net absorption — the change in occupied units — surged to 188,200 in Q2, the highest second-quarter tally on record, CBRE data show.
It was the fifth straight quarter in which leasing demand topped new deliveries, pushing the national vacancy rate down 70 basis points to 4.1%, well below the long-term average of 5%.
“This is a dramatic strengthening of fundamentals,” said Kelli Carhart, CBRE’s head of multifamily capital markets. “Demand is outpacing supply, and we see momentum carrying into 2026.”
After developers brought a record 450,000 new units online in 2024, completions slowed sharply to 83,000 in Q2. CBRE expects an even steeper drop-off in coming quarters as projects already under construction wrap up and fewer break ground.
The tightening supply backdrop helped rents notch their first meaningful increase in two years. Average monthly asking rent rose 1.2% from a year earlier to $2,228. CBRE forecasts further acceleration in rent growth through 2026, aided by healthy absorption and slower inventory growth.
Capital Flows Tilt Toward Multifamily
The investment market also showed renewed momentum. Transaction volume climbed 7.1% year-over-year to $32.9 billion, making multifamily the largest commercial real estate segment by investment share at 34% in Q2.
Regional Performance
- Midwest rents rose 3.7% year-over-year, Northeast 3.1%, and Pacific 1%.
- All 69 markets tracked by CBRE recorded positive net absorption, led by New York (19,300 units), Chicago (9,300) and Dallas (8,700).
- Net absorption exceeded new supply in 68 markets, up from 52 in Q1.
- Vacancy rates declined in 68 markets quarter-over-quarter.
CBRE expects fundamentals to strengthen further into next year as construction activity continues to recede, setting the stage for one of the tightest multifamily markets in over a decade.
