November 25, 2025

Multifamily Construction Pipeline in Dallas Shrinks to Near 10-Year Low

Q3 2025

Renter demand for apartment units remained consistently strong in Dallas-Fort Worth in the third quarter of 2025, with absorption totaling just over 5,000 units and marking the sixth consecutive quarter with net move-ins exceeding 5,000 units. Absorption figures through the first nine months of 2025 were nearly in line with 2024’s elevated pace, and consistent with the demand that has been recorded during the past 18 months. Still, new supply came online at a steady rate and exceeded move-ins for the quarter, leading to a slight uptick in vacancy. While absorption continues to remain strong, the pace of supply growth is slowing. Deliveries in the third quarter were down nearly 18% compared to the same period last year, and the number of units under construction contracted by over 20% as starts have slowed. Supported by tightening vacancies, slowing construction starts, and continued absorption, asking rents recorded a second consecutive quarter-over-quarter increase.

Transaction velocity through the first three quarters of 2025 was more than 5% higher than during the same period in 2024. Although volumes remain below the peaks recorded in 2021 and 2022, they have returned to just above pre-2020 averages. Deals are being executed across a broad range of vintages, with buyers in the third quarter acquiring a mix of older assets, primarily ranging from the 1960s through the 1990s, alongside a significant share of recently built properties from 2015 or later. Very recent deliveries from 2020 onward, including developments in Celina, Mansfield, and Richardson, comprised a notable portion of transactions in the quarter. Frisco, West Plano, and other high-growth suburban submarkets have been active spots for the sale of newer properties, while older vintage deals have been spread across the broader metroplex. In deals where valuations have been disclosed, per-unit pricing levels have remained consistent over the past few years despite interest rate volatility. Cap rates have also largely held steady during the past several quarters.

Looking ahead

The Dallas-Fort Worth multifamily market is positioned for continued improvement. Absorption has remained strong since gaining momentum in mid-2024 and has carried through the first three quarters of 2025, though some softening may occur as economic conditions cool. At the same time, new supply is tapering, with expected deliveries declining for seven consecutive quarters to the lowest level since the third quarter of 2022. This sustained drop in incoming units, combined with steady demand, is expected to push vacancy rates lower over the coming year. Permitting and groundbreaking activity has also slowed, easing additional supply pressure. Rents, while still slightly negative year-over-year as of the third quarter, have improved for two quarters and are projected to move towards annual growth in 2026. Overall, the market’s fundamentals continue to strengthen, setting the stage for modest rent growth and tighter vacancy conditions in 2026.

Multifamily investment momentum in Dallas-Fort Worth remains solid despite a temporary dip in third quarter transaction volume. Rolling four-quarter volume is still up nearly 32% year over year, keeping the market among the nation’s leaders in multifamily investment sales. Sales velocity is expected to strengthen throughout the remainder of 2025 and into 2026 as operating fundamentals continue to improve. Although interest rates were higher and more volatile than anticipated from late 2024 through mid-2025, recent rate cuts and a more stable lending environment in the closing months of the year could help reinvigorate activity. Cap rates have held steady for several quarters, with some compression likely as financing costs ease and rent growth firms. Supported by a diverse economy, business-friendly climate, and rapid population growth, Dallas-Fort Worth remains a compelling market for multifamily investment as it moves towards 2026.