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CoStar Raises 2027 Apartment Rent Growth Forecast to 2.6%

CoStar Raises 2027 Apartment Rent Growth Forecast to 2.6%

The multifamily market may be turning a corner faster than expected, as stronger renter demand and shrinking construction activity set the stage for accelerating rent growth through 2027.

Nina Dale
November 06, 2026

Good morning. The multifamily market may be turning a corner faster than expected, as stronger renter demand and shrinking construction activity set the stage for accelerating rent growth through 2027.

🎙️ This Week on No Cap: ACORE’s Warren de Haan on why a $17B lender doesn’t want to take your keys.

CRE Trivia 🧠

A triangular 1902 Manhattan tower took its lasting nickname from what common household object?

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Market Snapshot

S&P 500

GSPC

7,353.73

Pct Chg:
-4.36%

FTSE NAREIT

FNER

845.77

Pct Chg:
-1.64%

10Y Treasury

TNX

4.831%

Pct Chg:
-0.061%

CME Term SOFR

1-Month

3.90%

Pct Chg:
-0.00

*Data as of 11/05/2026 market close.

MARKET OUTLOOK

CoStar Raises 2027 Apartment Rent Growth Forecast to 2.6%

After years of oversupply weighing on apartment rents, the multifamily market is gaining momentum as stronger-than-expected demand and a shrinking construction pipeline set the stage for a faster recovery.

By the numbers: CoStar Group raised its national apartment rent growth forecast for Q4 2027 to 2.6%, up from 1.9%. The firm also increased its year-end 2026 projection to 1.4%, a 50-basis-point improvement, as apartment demand continues to outperform expectations and excess inventory gets absorbed.

Vacancies trending lower: National multifamily vacancy currently sits around 7.9% and is expected to remain relatively stable through 2026 before declining to 7.5% by the end of 2027. Stronger-than-anticipated leasing activity is helping markets work through the supply surge of 2024 and 2025 faster than originally projected.

Supply slowdown accelerates: New apartment deliveries are projected to drop 18% in 2026 to 434,000 units, followed by another 19% decline in 2027 to approximately 352,000 units. While renter demand is expected to moderate, declining construction should allow absorption to outpace new supply through 2028, helping restore pricing power for landlords.

The employment wildcard: A stable labor market remains critical to the recovery. Persistent inflation, tariffs, and elevated energy costs could pressure employers and weaken renter demand. Job losses could encourage renters to downsize, double up with roommates, or delay forming households, potentially slowing rent growth.

➥ THE TAKEAWAY

Beyond 2027: CoStar expects a more measured multifamily market after 2027, as slower population growth and labor-force expansion limit future apartment demand. The strongest recovery window appears concentrated in 2026 and 2027, before demographic headwinds begin to weigh on momentum.

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✍️ Editor's Picks

AI Sources ~$2M CRE deal: A CRE broker used Terrakotta’s AI agent to win a ~$2M listing in 16 days. The AI detected motivated seller signals, skip-traced the owner’s LLC, & found his contact info. 25 cold calls in, the deal was won. (sponsored)
Hiring map: San Antonio climbed 67 spots to 9th in NAR's Q3 industrial demand index, where factory and warehouse hiring now flags the metros quietly gaining momentum.
Bond wave: Voters approved at least $67B of municipal bonds on Nov. 3, up from $16B a year earlier, funneling fresh public money into schools, housing and civic construction.
Legal anchors: Top-100 law firms anchor 99 office buildings backing $35.4B of CMBS, and 27 of those loans worth $10.5B mature by 2027, testing the sector's steadiest tenants.
Debt buyer: Prime Finance acquired a CRE loan portfolio, the latest credit shop building debt exposure as a heavy wall of commercial mortgages comes due.

🏘️ Multifamily

Parking fight: LA tenants are suing landlords converting apartment parking into ADUs under SB 1211, after a judge froze one Hollywood project that turned 20 stalls into nine units.
Hidden risks: Multifamily leaders flag five overlooked 2027 risks beyond rates, from cybersecurity to a 7.2M-home shortage of affordable units, warning returns can erode where rent comps look fine.
Micro moves: Maryland's Prince George's County is weighing tiny homes and micro-units to ease affordability, with half its renters cost-burdened and 36,000 units needed by 2030.

🏭 Industrial

Closer in: A Prologis survey found 91% of business leaders want decentralized fulfillment networks, as same-day delivery and power reliability push warehouse demand nearer to customers.
Miami refi: LBA Realty landed a $133M Wells Fargo refinancing on its 709K SF Dolphin Commerce Center near Miami, upsizing a 2022 loan as South Florida industrial holds firm.
Voter brakes: Blue-wave midterms handed data centers a tougher map, with Texas governor-elect Gina Hinojosa pledging a moratorium that puts roughly 13 GW of planned capacity at risk.
Capital pairing: PGIM and Ares partnered on an industrial acquisition near Washington, DC, the latest institutional bet on logistics space in the capital region.

🏬 Retail

Field economics: CBRE pitched cities a four-step test for youth-sports venues as family spending topped $40B in 2024, up 46% since 2019, a boom municipalities increasingly subsidize.
Ballpark draw: Placer.ai data shows Banana Ball is pulling road-tripping families to ballparks nationwide, a foot-traffic surge that spills into the hotels, restaurants and retail around each stadium.
Wayfair rebound: Wayfair logged its strongest growth since the pandemic, with US revenue up more than 11% in Q3, lifting demand for the warehouse and delivery space behind home goods.
Brand politics: A new study ranks Subway and Kroger among retail's most politically bipartisan brands, a cross-aisle appeal that supports steady foot traffic for their landlords.

🏢 Office

No bubble: JLL sees limited bubble risk from AI office leasing, noting the recovery has run five straight quarters and would look similar without AI, since no new supply targets it.
Hub crown: San Diego topped 409 cities as the top US innovation hub, leading on federal research grants and 17.5M SF of lab space, ahead of Cambridge and San Jose.
Short sale: Cushman & Wakefield's Chicago HQ at 225 W. Wacker sold for $115M, a 45% markdown from its 2020 price, as even well-leased towers reprice in a battered office market.
Suburban test: Franklin Street is listing 11 suburban office buildings, including five in Plano and Addison, a discount-to-replacement play testing investor appetite as Dallas office otherwise booms.

🏨 Hospitality

Urban lift: Summit Hotel Properties credited strong urban-market performance for its Q3 growth, adding to signs that downtown hotels are leading the sector's recovery.
Rental edge: Ember Stays ranked first among 28 St. George, Utah vacation-rental operators, posting 72% occupancy against a 56% market median as professionalized short-term-rental management scales.
Fairmont return: Fairmont opened a 250-room hotel in downtown New Orleans, its return to the city two decades after Katrina shuttered the property it ran that is now the Roosevelt.

📈 CHART OF THE DAY

Apartment starts decline sharply after Fed rate hikes, falling 17% within eight quarters, while starts rise 47% when rates remain unchanged, highlighting how higher borrowing costs can restrict new supply and potentially push rents higher.

CRE Trivia (Answer)🧠

A clothes iron. The wedge-shaped 1902 tower was so widely likened to a flatiron that the nickname stuck, replacing its original name, the Fuller Building.

CoStar Raises 2027 Apartment Rent Growth Forecast to 2.6%

The multifamily market may be turning a corner faster than expected, as stronger renter demand and shrinking construction activity set the stage for accelerating rent growth through 2027.

CRE Trivia 🧠