1,018 Units Absorbed: Katy Led Houston Leasing and Cut Rent the Most

No part of Houston leased more apartments last quarter than the Katy, Cinco Ranch and Waterside submarket. Renters there absorbed a net 1,018 units, out of 4,801 across the metro, according to Transwestern's Houston multifamily report for the third quarter, released Nov. 6.

The same table shows the submarket's average effective rent down 5.4% from a year earlier, to $1,371. No other submarket among the 42 Transwestern tracks fell further.

Occupancy rose to 86.6%, from 85.5% in the second quarter, and it is still the lowest in the table. Metro Houston sits at 91.2%.

Cushman & Wakefield's count agrees

Cushman & Wakefield draws its map differently. Its Cinco Ranch submarket holds 26,060 units, about half the 52,212 Transwestern counts across 185 communities in its larger Katy area, and it reports stabilized vacancy rather than total occupancy.

In the firm's third-quarter MarketBeat, Cinco Ranch rents fell 5.3% over the year to $1,446, the weakest of its 28 submarkets, and vacancy rose 120 basis points to 9.4%.

Developers delivered 2,048 units in Cinco Ranch in the first nine months of 2026, adding 8.5% to its stock, the fastest growth on the list, while the metro grew 1.9%.

Renters took 774 units there over the same stretch. When that many buildings lease up at once, they compete for the same tenants, and price is the easiest lever.

The pipeline behind the wave is thin

The construction that produced those deliveries is almost finished. Cushman & Wakefield counts 144 units still underway in Cinco Ranch, and Transwestern's wider Katy area has 690 under construction, down from 764 a quarter earlier.

Metro-wide, Cushman & Wakefield's count is 11,538 units under construction, 37.0% fewer than a year earlier. Statewide, the Texas Real Estate Research Center at Texas A&M projected in September that apartment deliveries would fall from 93,000 units over the prior year to 40,000 by summer 2027, CRE Daily reported Sept. 11.

Between Transwestern's second- and third-quarter reports, absorption rose to 1,018 units from 562, while the average rent slipped from $1,384 to $1,371.

The area has been through a worse stretch before. Community Impact reported in July 2024, citing MRI ApartmentData, that Katy's apartment occupancy fell from 90% in June 2022 to 82.3% in May 2024.

What it means for owners and investors

For a buyer, the open question is whether Katy's rent comes back once the lease-ups finish or whether the discount is now the market.

The rent tables leave out concessions. Transwestern said concessions were offered on 55% of units metro-wide in the second quarter, and Realtor.com's September rent report found a concession on 59.9% of Houston listings, against 43.9% across the 50 largest metros.

RealPage counts differently, using stabilized units, and found concessions on 14.5% of them nationally in September at an average discount of 11.1%. A listing count and a unit count are different bases, so the two figures do not line up.

None of the three breaks the figure out for Katy, so a rent roll from the submarket needs a lease-by-lease look at free weeks before anyone values it.

Buyers have still come for newer Katy product. ORIX bought The Vic at Jordan Ranch, 365 units that opened in 2024, in a deal Yardi Matrix estimated at $66.9 million, and it took $50.2 million of permanent financing from ACRE, Multi-Housing News reported Sept. 8.

The property was about 90% occupied, and the estimate works out to about $183,288 a unit by our arithmetic. Yardi Matrix's July Houston report put the metro's average sale price at $131,022 a unit through May, and it said West Houston accounted for 92% of the $1 billion of transaction volume over that stretch.

Debt is cheaper than it was a month ago. The 10-year Treasury closed at 4.86% on Nov. 6, down from 5.24% on Oct. 1, and SOFR was 3.92% on Nov. 5, but MSCI data put the national apartment cap rate at 5.9% in the third quarter, up 20 basis points from a year earlier.

Katy's pattern shows up elsewhere in the suburbs. Sugar Land, Stafford and Sienna absorbed 265 units with rents down 5.1%, and Lake Houston and Kingwood absorbed 260 with rents down 4.6%, while Montrose, Museum and Midtown rents rose 3.5%.

What to watch next

Population growth around Katy has held up. Waller County grew 5.7% in the year to July 2025, the second-fastest rate of any U.S. county in Census estimates reported by the Texas Tribune, and Harris County added 48,695 residents, the largest numeric gain in the country.

Katy ISD opened its 2026-27 year on Aug. 12 with nearly 94,000 students. Jobs are the weak side: the Dallas Fed said Houston payrolls fell at a 0.4% annualized rate from June to September, a loss of 3,800 jobs.

New starts are back as well. Hunington Residential has broken ground on The Vic at Sunterra, 279 units in Katy, and its next project, The Vic at Tamarron, is slated to start in early 2027, Realty News Report wrote Nov. 6.

Its parent, Hunington Properties, is the firm that sold The Vic at Jordan Ranch to ORIX. It sold one Katy property in September, with rents falling, and started another in the same suburb about two months later.

OHT Partners broke ground in August 2025 on a 360-unit complex on Kingsland Boulevard that Realty News Report said would open in mid-2027, and Cushman & Wakefield lists Vista Residential Partners' 375-unit Vista Williams Ranch, in its Richmond Rosenberg submarket, for delivery in the first quarter of 2027.

The fourth-quarter reports will show whether Katy can keep leasing at this pace with less new product to fill. Neither firm publishes a Katy concession rate, so how many of those 1,018 units were leased with free weeks is still unknown.