12.9% Vacancy Leaves Houston Behind the Sun Belt Recovery

The national apartment recovery picked up speed in the third quarter, and Houston's numbers barely moved. In its Q3 2026 U.S. Multifamily MarketBeat, released October 14, Cushman & Wakefield puts national vacancy at 8.6%, down 30 basis points from the second quarter and the lowest reading since Q3 2023.

Asking rents rose 2.3% from a year earlier to $1,950. That is the fastest annual gain since early 2023.

The market tables in the full report put Houston's overall vacancy at 12.9% in Q3 2026, up from 12.8% in the second quarter and 12.4% a year earlier. The average asking rent was $1,373, against $1,376 in Q3 2025.

Cushman labels the Q3 figures preliminary.

A recovery the South is sharing

Most of the region is improving. Cushman says vacancy across the South has fallen to 10.5% from its late-2025 peak, with 31 of the region's 38 markets posting a decline over the past year.

Southern rent growth turned positive in the second quarter and reached 1.1% in the third.

The other big Texas and Sun Belt metros are further along. Austin's vacancy fell from 14.3% to 11.6% over the year, Dallas-Fort Worth's from 12.2% to 11.3%, Phoenix's from 12.8% to 10.7% and Atlanta's from 12.0% to 10.8%.

All of them ended Q3 below Houston's 12.9%. Austin's average asking rent climbed to $1,569 from $1,544.

Supply still beat demand in Houston

The quarterly tables explain the gap. Houston delivered 12,971 units in the first three quarters of 2026, according to Cushman.

Net absorption was 1,140 units in Q1, 6,077 in Q2 and 3,498 in Q3, which adds up to 10,715. Nationally, Cushman says absorption outpaced deliveries in every quarter this year.

In Houston, new units kept arriving faster than renters filled them. Vacancy stayed near 13% all year.

If you have seen Houston quoted with about 26,000 units absorbed this year, that number is in the same report. Its narrative lists Houston fifth in the country at that figure, well above the 10,715 in its own tables.

Cushman's separate Houston report for Q2 counted 8,377 units of absorption in the first half and stabilized vacancy of 11.1%, a measure that leaves out buildings still in lease-up. We use the table figures here and leave the 26,000 as an open question until Cushman explains the difference.

Other trackers point the same direction even where their levels differ. The Greater Houston Partnership put metro occupancy at 88.1% in Q2, down from 88.6% a year earlier, and its average asking rent of $1,368 sat below the $1,380 of Q2 2025.

Local demand is mixed. The Dallas Fed's Houston Economic Indicators show jobs growing at a 2.1% annualized rate from April to July, but only 0.5% over the full year, with unemployment at 4.9%.

Renters also have more house to choose from. The Houston Chronicle reported that leasable single-family homes, townhomes and condos rose 80% in three years to about 16,660 listings in September, citing John Burns Research.

Zillow estimates 4.3% of Houston's single-family rental listings come from owners who gave up on selling.

What it means for owners and investors

Underwriting should start from flat rents. RealPage reported on October 13 that Houston rents did not grow in the third quarter and were down about 2% from a year earlier, with Class C rents down 5.4% while Class A rose 1%.

A model that assumes Houston follows the national rent curve next year has no support in these numbers. RealPage's Carl Whitaker argues that Houston's large single-family supply pulls renters away from apartments, and the steep Class C decline fits that reading.

Debt costs raise the price of waiting. The Federal Reserve raised its target range by a quarter point to 3.75% to 4.00% on September 16.

Freddie Mac's 30-year mortgage average was 7.40% on October 8, and the 10-year Treasury closed at 5.19% on October 14. With flat rents and long-term rates above 5%, a stabilized deal financed today has little room to grow into its debt service.

Supply is the better news. Cushman counts 11,908 Houston units under construction against an inventory of 721,251, which by our arithmetic is under 2% of the stock, compared with 3.6% nationally.

Northmarq expects about 5,600 deliveries in 2027, the lowest annual total in nearly 15 years. Cushman adds that starts were already falling before the September rate hike and that higher financing costs will make new projects harder to pencil.

If absorption holds at this year's pace, the shrinking pipeline should let Houston's vacancy start falling in 2027.

Pricing already reflects some of this. Matthews put Houston's average cap rate at 6.28% and price per unit at $142,420 in Q2, from data that use a different vacancy measure than Cushman's.

Lenders and buyers are still active. The Mortgage Bankers Association said multifamily loan originations nationally rose 8% from a year earlier in the second quarter.

In Houston, Spirit Investment Partners and Strategic Value Partners bought the 573-unit Resia Ten Oaks in West Houston with acquisition financing from Oaktree Capital Management. In early October, Accel Equity Group bought the 324-unit Holly View Apartments in northwest Houston for $31.5 million.

What to watch next

Cushman's Houston MarketBeat for Q3 comes first. It should show whether stabilized vacancy stalled along with the overall rate, and it is the likeliest place for the 26,000-unit question to be settled.

After that, the Texas Workforce Commission's next jobs release matters most. Job growth above the 0.5% annual pace would be the clearest sign of stronger renter demand.

Concessions are where owners will feel it. Austin, Dallas-Fort Worth and Phoenix all cut vacancy over the past year while Houston's rose, and another quarter with Houston vacancy stuck near 13% would mean planning for concessions well into 2027.