Marking the fourth consecutive year of progress on this front
Higher Incomes, Steady Rents Are Bolstering Apartment Demand
The U.S. apartment market faces its share of challenges in 2026, but several tailwinds could help support demand, according to a RealPage report. While an upside scenario appears less likely than during the strong expansion of the 2010s, a handful of macroeconomic factors could still shape a more optimistic outlook.
At the top of the list is improving real wage growth. Inflation outpaced wage gains in 2021 and 2022, leading to a decline in real wages despite strong nominal wage increases. That dynamic has shifted in recent years as inflation cooled while wage growth remained intact.
Today, real wages are expanding at a pace that can support additional household formation, according to RealPage. This trend has been further bolstered over the past two to three years as rent growth has largely flattened.
At the same time, the share of income Americans spend on rent has fallen to its lowest level since before the pandemic, the report said. While affordability challenges persist, the combination of wage growth and slower rent increases is expected to drive another year of improvement in 2026, marking the fourth consecutive year of progress on this front.
Fewer renters are leaving multifamily housing for the single-family market, helping sustain a deep pool of rental demand. REITs report that move-outs to single-family homes are running at roughly half their normal pace, while apartment lease renewal rates are near all-time highs.
Although housing prices in oversupplied markets have begun to cool, potentially reinvigorating single-family demand, the cost gap between renting and owning remains historically wide. RealPage noted it will take more than incremental adjustments to home prices, mortgage rates or incomes to normalize the relationship between the single-family and multifamily markets.
Demographics also continue to support apartment demand. The population of young adults aged 18 to 34 has grown by 1.18 million people since 2018 or about 236,000 annually, according to RealPage. At the same time, this cohort is marrying and starting families later than previous generations, delaying household formation that would typically fuel single-family housing demand and keeping renters in multifamily housing longer.
Finally, the currently sluggish labor market, often viewed as a headwind, could become a longer-term tailwind if conditions improve. RealPage noted a meaningful share of young adults who continue to live with parents or extended family, suggesting pent-up demand for rental housing. However, the firm characterized this as a “longshot tailwind,” noting that labor market softness has disproportionately affected younger workers.
Source: GlobeSt.
Accessibility