Dallas-Fort Worth multifamily quarterly demand nearly doubles new supply

Dallas-Fort Worth multifamily market overview

Dallas-Fort Worth’s operating fundamentals improved further during the second quarter. Net absorption far outpaced new supply; net absorption was about 12,000 units, nearly doubling the number of units that were delivered. Demand was widespread throughout the Metroplex, exceeding new supply in nearly every submarket. Dallas accounted for an increasing share of that demand, accounting for about 78%, up from roughly 70% in the first quarter. New supply eased to about 6,200 units delivered, the lowest quarterly total since early 2023. The construction pipeline continued to shrink, falling to roughly 43,300 units, 43% below its 2023 peak. As a result of elevated demand and slowing deliveries, vacancy declined notably, with Class A and Class B properties leading the gains. Rent performance strengthened for a second consecutive quarter and remained led by higher-quality product. Class A rents rose 1.3% quarter over quarter and have now recorded year-over-year growth for three consecutive quarters. Class B rents continued to gain traction, rising 0.8% quarter over quarter, while Class C properties declined 0.6%.

Multifamily investment activity in Dallas-Fort Worth held steady through the first half of 2026, with 72 properties changing hands. Activity peaked in March and picked back up in June. The cities of Dallas and Fort Worth continued to anchor the market, together accounting for 54% of deals. Buyers there purchased properties across a broad vintage range, from 1960s- and 1970s-era garden communities to mid-rise and high-rise properties built in the late 2010s and early 2020s. Irving was the next most active city, followed by Richardson. The mix of properties has shifted in recent months. Mid-rise and high-rise properties made up nearly 30% of deals overall, but most of those sales closed in the first quarter. In the second quarter, investors increasingly targeted garden communities built in the 2000s and early 2010s. Cap rates averaged about 5.25%, with newer properties trading roughly 75 basis points tighter than older ones.

Looking ahead for Dallas-Fort Worth:

Dallas-Fort Worth is positioned for continued improvement in the second half. Deliveries are forecast to reach their lowest level since 2022, and the combination of slowing supply and steady renter demand is projected to support a year-over-year vacancy decline in 2026. Following a period of below-trend growth in 2025, the local labor market is forecast to build on momentum, with approximately 51,000 jobs projected to be added, a 1.2% increase. Rents are expected to build on the two recent quarterly improvements and return to year-over-year growth by year-end, with demand remaining concentrated in the submarkets receiving the bulk of new supply. Gains are expected to be strongest in the urban core of Dallas and older infill submarkets.

The Dallas-Fort Worth investment market is positioned for a stronger second half after a measured start to 2026. First-half volume of about $3.4 billion trailed the prior-year pace by roughly 22%, though second-half activity has improved in each of the past three years. The move toward larger, newer assets is expected to persist, with mid-rise and high-rise properties gaining share of transactions each year since 2023. Sales are likely to shift toward the northern suburbs as recently completed properties in Allen/McKinney, Frisco, and Denton, which delivered roughly one-third of the metro’s new units over the past year, stabilize and come to market in late 2026 and 2027. A growing number of lender-driven sales is expected to bring older, value-add inventory to market, creating opportunities for buyers heading into 2027.

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