Market Forecast 2026 Mid-Year
Multifamily
Outlook
MULTIFAMILY MOVES TOWARD BALANCE AS DEMAND STRENGTHENS
The multifamily sector is gradually returning to more balanced conditions following a significant wave of new apartment deliveries.
Elevated interest rates, slower job growth, and increased supply created headwinds throughout 2024 and 2025. However, market fundamentals began to improve in early 2026 as demand strengthened and new construction slowed.
Persistent affordability challenges also continue to support rental housing demand. High home prices, elevated mortgage rates, and limited for-sale inventory have kept many households in the renter pool, helping maintain healthy occupancy levels as the market continues to absorb recent deliveries.
Vacancy Rate by Market
| Market | 4Q 2019 | 2Q 2025 | 2Q 2026 |
|---|---|---|---|
| Phoenix | 6.5% | 11.7% | 11.3% |
| Portland | 7.3% | 7.2% | 7.1% |
| Seattle | 5.8% | 7.0% | 6.7% |
| Sacramento | 4.6% | 6.5% | 6.7% |
| Inland Empire | 4.7% | 6.0% | 5.6% |
| Los Angeles | 4.9% | 5.0% | 5.5% |
| San Diego | 4.9% | 4.9% | 5.5% |
| Orange County | 5.1% | 3.8% | 4.3% |
| Bay Area | 5.1% | 5.1% | 4.0% |
| Western U.S. | 5.4% | 6.5% | 6.6% |
Source: CoStar, Kidder Mathews Research
INVESTMENT ACTIVITY GAINS MOMENTUM AS CONFIDENCE RETURNS
Multifamily investment activity is gaining momentum as capital markets stabilize and investor confidence improves.
Activity strengthened meaningfully during 2025 and into 2026 as lower interest rate volatility, improving lender activity, and clearer underwriting assumptions brought more buyers back to the market. Western U.S. transaction volume approached $40 billion in 2025 and remained near that pace during the first six months of 2026.
Investor interest is also being supported by growing expectations that market fundamentals will strengthen as new supply declines. With apartment starts and under-construction volumes continuing to fall, many investors are positioning for tighter market conditions and improving long-term performance.
Investment Market Activity
| Period | Total Sales Volume (Rolling 4-Qtr Total) | Avg. $/Unit (4-Qtr Rolling Avg.) |
|---|---|---|
| 4Q 2023 | $23.5B | $253,000 |
| 4Q 2024 | $36.0B | $260,882 |
| 4Q 2025 | $40.3B | $275,000 |
| 2Q 2026 | $39.2B | $274,816 |
Criteria: sales located in WA, OR, ID, NV, CA, and AZ that were 5+ units and $1 million or higher in sale price. Source: CoStar, Real Capital Analytics.
LIMITED SUPPLY SUPPORTS CONTINUED MULTIFAMILY RENT GROWTH
The Western U.S. multifamily market remains one of the most expensive and supply-constrained regions in the country.
Steady job growth, limited housing inventory, and persistent affordability challenges continue to support rents, even as growth has moderated in some markets. Demand for quality multifamily housing remains resilient across major coastal metros.
San Francisco remains the most expensive apartment market in the United States, with average rents of $3,894 per unit across all sizes. Rents have continued to rise as workers return to the city and AI-focused hiring drives renewed demand. Looking ahead, rents are expected to trend upward over the near term, particularly in supply-constrained coastal markets, as solid employment growth forecasts and limited new housing deliveries support healthy occupancy and pricing power.
Western U.S. Rents
| Market | 2Q 2026 Asking Rent ($/Unit) |
|---|---|
| San Francisco | $3,894 |
| SF Peninsula | $3,567 |
| Silicon Valley | $3,437 |
| Orange County | $2,897 |
| Los Angeles | $2,870 |
| San Diego | $2,788 |
| Oakland/East Bay | $2,654 |
| Seattle | $2,246 |
| Inland Empire | $2,243 |
| Sacramento | $2,021 |
| Reno | $1,790 |
| Portland | $1,755 |
| Phoenix | $1,611 |
| Las Vegas | $1,504 |
| Western U.S. | $2,261 |
Source: Yardi Matrix, Kidder Mathews Research
MULTIFAMILY OUTLOOK: POSITIONED FOR GRADUAL STRENGTHENING
The multifamily sector remains positioned for steady performance and gradual strengthening.
Strong renter demand continues to offset the effects of slower economic growth and elevated interest rates. The widening affordability gap between renting and homeownership remains one of the sector’s strongest demand drivers, as high mortgage rates, elevated home prices, and limited housing inventory keep many households in the rental market longer.
Although rent growth is expected to remain modest in the near term, particularly in markets still absorbing recent deliveries, occupancy levels have generally stabilized and leasing activity remains healthy. At the same time, a sharp decline in new construction starts is reducing future supply pressure and setting the stage for improving fundamentals. Combined with growing investor interest and more stable capital markets, these trends support a favorable outlook for the sector over the next several years.
Western U.S. Forecast
| Year | Vacancy Rate | Average Asking Rate ($/Unit) |
|---|---|---|
| 2024 | 6.6% | $2,092 |
| 2025 | 6.9% | $2,119 |
| 2026F | 6.7% | $2,181 |
| 2027F | 6.5% | $2,231 |
| 2028F | 6.3% | $2,283 |
Source: CoStar, Kidder Mathews Research. “F” = forecast.
Frequently Asked Questions
What is the average price per unit for Western U.S. apartment sales right now?
The average sale price for Western U.S. multifamily properties was $274,816 per unit as of the second quarter of 2026, based on a four-quarter rolling average (data source: CoStar, Real Capital Analytics). This figure covers sales of properties with five or more units priced at $1 million or higher across Washington, Oregon, Idaho, Nevada, California, and Arizona. Pricing has held in a relatively narrow range after declining sharply in 2023 and 2024.
How much multifamily investment activity is happening in the Western U.S.?
Western U.S. multifamily transaction volume approached $40 billion in 2025 and remained near that pace through the first six months of 2026, according to Kidder Mathews research. Activity has strengthened as interest rate volatility has eased, lender activity has improved, and underwriting assumptions have become clearer. This has brought more buyers back into the market after a slower stretch in 2023 and 2024.
What is the most expensive apartment market in the country right now?
San Francisco remains the most expensive apartment market in the United States, with average rents of $3,894 per unit across all unit sizes, according to Kidder Mathews research. Rents in San Francisco have continued to climb as workers return to the city and AI-focused hiring drives renewed housing demand.
What is the current Western U.S. apartment vacancy rate, and where is it headed?
The Western U.S. multifamily vacancy rate reached 6.9% in 2025, up from 4.4% in 2021 (data source: CoStar, Kidder Mathews research). Kidder Mathews forecasts vacancy will ease to 6.7% in 2026, 6.5% in 2027, and 6.3% in 2028 as new construction slows. The gradual decline reflects the market absorbing recent apartment deliveries while new supply pulls back.
Is new apartment construction slowing down in the Western U.S.?
Yes, apartment starts and under-construction volumes are continuing to decline across the Western U.S., according to Kidder Mathews research. This pullback in new supply is a key reason many investors are positioning for tighter market conditions and improving long-term performance over the next several years.
Will apartment rents keep rising in the Western U.S.?
Rents are expected to trend upward over the near term, particularly in supply-constrained coastal markets, according to Kidder Mathews research. Solid employment growth forecasts combined with limited new housing deliveries are expected to support healthy occupancy and continued pricing power in these markets.
Why is renter demand staying strong despite slower economic growth?
Renter demand is staying strong because the affordability gap between renting and buying a home continues to widen, according to Kidder Mathews research. High home prices, elevated mortgage rates, and limited for-sale housing inventory are keeping many households in the rental pool longer, which is helping sustain occupancy even as the market absorbs a recent wave of apartment deliveries.
Is now a good time to buy or sell a multifamily property in the Western U.S.?
Investor confidence is improving, with Western U.S. multifamily transaction volume holding near $40 billion annually through 2025 and into the first half of 2026, according to Kidder Mathews research. Lower interest rate volatility and clearer underwriting assumptions have brought more buyers back to the market, and many investors are positioning ahead of an expected tightening in supply as new construction declines.
How does today’s Western U.S. multifamily vacancy rate compare to pre-pandemic levels?
The Western U.S. multifamily vacancy rate was 4.9% from 2015 through 2017, compared to 6.9% in 2025, according to Kidder Mathews research. The increase reflects a significant wave of new apartment deliveries in 2024 and 2025 that temporarily outpaced demand, though vacancy is forecast to gradually decline to 6.3% by 2028 as construction activity slows.
ContactGARY BARAGONA |
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