New apartment supply has pulled back as many markets post positive net absorption.
After several years of unusually high construction activity, new apartment supply is starting to ease. CBRE reports that roughly 560,000 units remain under construction nationwide, almost 30 percent below the early-2024 peak of 760,000. RealPage’s latest permitting update shows a similar cooling trend, with multifamily permits continuing to slow across most major regions as developers and lenders remain cautious about starting new projects.
At the same time, demand has settled into a more balanced rhythm with subsequent quarters of positive absorption in major markets. CBRE reports positive absorption in 52 of 69 markets in Q3 2025, after 68 markets saw demand outpace new supply in Q2 2025. Vacancy remains at 4.4%, near its pre-pandemic norm, and annual rent growth near 0.5% reflects a cooling market.
What this means: With oversupply fading, rents leveling off, and pricing still discounted, this environment favors disciplined, selective entry. Less new supply, slower rent growth, and steady demand put a premium on fundamental operating expertise to manage costs and sustain occupancy.
We are focusing on affordable, workforce, and attainable communities because affordability keeps residents longer, improves renewals, and reduces turnover, strengthening cash flow when rent growth is muted.
As more discounted opportunities emerge, we prioritize below-replacement-cost acquisitions, which provide a cushion if the market softens or cap rates rise. We also use simple, fixed-rate debt to protect cash flow in a volatile rate environment. Finally, we lean into submarkets where new supply is tapering, since fewer competing properties support occupancy and pricing as pipelines clear into 2026.
In the news
The Fed cuts interest rates. The FOMC cut the policy rate by 25 bps in September and again in October, bringing the target range to 3.75-4.00%, marking a cautious turn toward monetary easing. The move has improved financing sentiment among lenders and borrowers, though underwriting standards remain cautious.
Transaction activity rebounds. According to MSCI Real Assets, U.S. apartment sales rose about 13% year-over-year in Q3 to roughly $43.8 billion, and transaction volume was about 21% higher than in Q2, suggesting investors are re-entering the market at adjusted pricing levels. Private and regional buyers are becoming more active as interest-rate visibility improves.
Regional Highlight: RealPage data shows that in the South (including Texas), multifamily permitting fell about 26% year-over-year in August. Zooming in further, in San Antonio’s northern submarkets (Northwest and North Central), year-to-date absorption was positive while deliveries slowed much more sharply from earlier peaks, showing that some pockets are normalizing faster than metro-level figures suggest.
