Annual Rent Growth Strengthens as Apartment Market Recovery Continues

The U.S. apartment market continued its gradual recovery in August.

Same-store effective asking rents increased 0.9% year-over-year, according to data from RealPage Market Analytics. After annual rent growth turned positive in July for the first time in several months, August's increase reinforced signs of continued pricing recovery.

While the annual reading improved notably, the gain stemmed less from robust monthly pricing (rents were up only 0.1% during the month), and more from weak rent performance falling out of the annual calculation. In fact, the U.S. apartment market has seen small monthly gains every month of 2026, after sustaining small declines throughout the back half of 2025.

August marked eight monthly rent increases in 2026 ranging from 0.1% to 0.6%. This steady upward trend indicates that apartment fundamentals continue to strengthen even as many markets continue to work through historically high volumes of new supply.

U.S. apartment occupancy was at 95.5% in August, a showing that matched the July rate and the prior year’s reading. Though stable of late, occupancy has climbed 90 bps in the first eight months of 2026. This follows a steady occupancy decline (similar to what was seen in rents) throughout the back half of 2025.

Helping support occupancy and rent performance, the U.S. absorbed more than 187,000 units in 2026’s 2nd quarter, marking one of the strongest spring leasing seasons in recent years. Annual demand remained below long-term norms, however, largely due to net move-outs recorded in late 2025. Demand totaled roughly 271,300 units in the year-ending 2nd quarter, below the decade average of about 340,000 units.

At the same time, annual apartment supply continued to moderate, with deliveries falling below the decade average for the first time in roughly three years. About 340,200 ​units were completed nationwide in the year-ending 2nd quarter, extending a trend of declining supply volumes after deliveries peaked near 588,000 units in late 2024.

Bay Area Sets the Pace as Rent Growth Splits by Region

The national rent growth figure hides just how far apart the country's apartment markets have drifted. Behind that number sit coastal tech hubs turning in double-digit gains and Sun Belt metros still cutting prices to fill units.

Northern California's tech-driven markets led the nation in rent growth, with San Francisco posting a 14% annual increase. San Jose followed at 8.7%, while Oakland price increases accelerated to 6.2%.

Virginia Beach recently emerged as one of the nation’s top-performing apartment markets, posting annual rent growth of 6.5% through August (inspired by the highest occupancy rate in the largest 50 U.S. markets). That pace exceeded growth in New York, a market that typically ranks among the nation’s leaders but has recently seen annual rent gains moderate to 4.5%.

The durable Midwest led all four U.S. regions in the year-ending August 2026, with annual rent growth of 2%, reflecting relatively manageable levels of new supply. Milwaukee led the major Midwest markets with annual rent growth of 5.1%, while Chicago recorded a 2.6% increase. Rounding out a tightly clustered group of gains were Cleveland (2.4%), Detroit and St. Louis (both at 2.3%).

Sun Belt Supply Volumes Still Weighing on Rent Performance

The South remains the only U.S. region still seeing annual rent cuts and is the only region with apartment occupancy below 95%. Sun Belt markets, which continue to work through heavy completion volumes, are the drivers behind this decline.

San Antonio was the hardest hit among large metros, with rent cuts of 3.7% and occupancy down to 93.1%. Charlotte, Tampa and Houston saw annual rent cuts near 2%. Notably, the pressure has begun to ease in Phoenix and Austin, where cuts have narrowed to roughly 1% to 1.4% after far steeper declines earlier in the year.

While new deliveries remain a challenge, demand has held up well in many of these markets. With development activity expected to moderate, these areas may be well positioned to benefit from a healthier balance between apartment supply and renter demand in the near term.

In a handful of these markets, softer tourism spending, part of a wider consumer pullback on discretionary budgets, has compounded the performance in vacation-driven metros. Class C product in these markets has been hit the hardest, as thinner demand from service and hospitality workers pulls down rents in that product.