Rent growth improves to open 2026 for Houston’s multifamily market

Houston multifamily market overview

The first quarter proved to be an active period in the Houston multifamily market. The pace of deliveries accelerated, following a significant slowdown in 2025. The spike in the first quarter is not expected to continue through the remainder of this year; rather, deliveries in 2026 are forecast to total fewer units than came online in 2025. The trend that emerged during the first quarter that is expected to persist is rent growth. Rents gained 1.0% at the beginning of 2026, after remaining within a tight range for much of the prior year. The strongest rent growth was concentrated within the Sam Houston Tollway. North/Northeast Houston, which covers the area immediately north of Downtown up to Adeline, East Adeline, and Dyersdale, posted the greatest annual rent growth of 5.4%. Other top-performing submarkets within the Sam Houston Tollway included Briar Grove/Westchase, Montrose/River Oaks, and Braeswood/Bellaire. In recent years, supply pressures within the Sam Houston Tollway have eased, giving operators room to raise rents.

Momentum from the second half of 2025 continued into 2026 in the Houston multifamily investment market. After a period of below-trend activity from 2023 to mid-2025, first quarter sales exceeded the region’s trailing 10-year average for the period by 11%. To this point in 2026, investors have acquired properties across a wide range of vintages. Properties built since 2020 have accounted for about 20% of year-to-date sales, and investors have also acquired healthy numbers of properties built in the 1980s and the early-2000s. As the asset mix evolves, the investor pool has also recorded a slight shift, with in-state owners accounting for fewer dispositions. Texas-based sellers accounted for only 39% of the transactions in the first quarter, compared to 55% during the past five years.

Looking ahead for Houston

Operating conditions are expected to improve through the end of the year, as supply growth in the Houston multifamily market is expected to slow by 8% from 2025 to 2026. Asking rents are projected to continue to advance through the end of the year, while vacancy conditions are forecast to improve on an annual basis. Rent growth should remain the strongest within the Sam Houston Tollway, as supply growth in this area is expected to remain mild. Just 20% of the units under construction are located inside the Sam Houston Tollway, which will likely leave room for further rent increases in the area. Suburban, outlying areas are expected to continue to post rent growth, though at a more moderate pace as supply-side pressures will be more prevalent.

An early look into the second quarter suggests that sales activity may be slowing in the near term, but the pace of sales could accelerate in the second half. Total sales in 2026 are forecast to closely track levels recorded in 2025. While new builds have made up a solid portion of the recent sales, value-add properties will likely remain the core of the investment market in the coming quarters. Properties built between 1980 and 2008 have made up more than half of the sales year to date. On the property performance side, Class B and Class C properties are posting stable vacancy conditions with rent growth remaining below market levels. Investors are expected to continue targeting these older assets in anticipation of capturing potential rent growth through targeted renovations.

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