Potential Headwinds for the U.S. Apartment Market in 2026

Though it’s not uncommon for personal experience to differ from a broader group’s experience, sentiment surrounding today’s economic climate feels arguably as disconnected from the macro reality than ever before. Despite what many headlines might seem to indicate, macroeconomic stats such as strong, continued wage growth, cooling inflation, and robust GDP figures (among a number of other ancillary datapoints not named here in the interest of brevity) support a narrative of an overall sturdy economy.

That isn’t to say, however, that the more disenfranchised personal view of many should be totally dismissed. Inflation – while cooling on its year-over-year measure – has a cumulative impact to consider and has undoubtedly affected the psyche of many people. Labor market constraints have put a damper on one of the most vital macroeconomic metrics as well (job growth). And the heaviness that comes with today’s 24-hour news cycle has a very real impact on the perception of the masses, one of many subthemes that’s captured by today’s intensely dour consumer sentiment. 

All this is to say then that there are a cloudy set of conditions at the onset of the 2026 calendar year. In this three-part series, we’ll discuss headwinds that could affect the U.S. apartment market, tailwinds that could unlock surprising upside in the sector, and finally a coalesced RealPage house view of where the industry is – and where it will head – over the next 12 months.

Headwind #1: Soft Labor Market Fundamentals

It feels almost irresponsible to start a blog discussing macro headwinds without immediately addressing the proverbial elephant in the room which is a rapidly cooling labor market. Outside of the pandemic era, today’s job growth is slower than any other period in the past 15 years. The U.S. is estimated to have added fewer than one million jobs in calendar year 2025, the lowest such rate (excluding 2020) since 2011.

While the direct impact of job growth on demand and rent growth tends to be overstated, it’s equally fair to say that the labor market will need to reestablish its footing in 2026, else demand could slow as a result of fewer jobs being created.

Headwind #2: A Bleak Consumer Outlook on the Economy

There’s a lot of truth to the saying that “perception is reality,” which goes hand in hand with the opening portion of this blog. Though the macro stats may tell a different story, the unfortunate reality that’s reflected in key consumer sentiment data (e.g., University of Michigan’s Consumer Sentiment Index) is that many households don’t feel particularly good about their current economic situation. Further, their near-term outlook on their situation isn’t much better.

The reason this is important is that when consumers feel trepidation they tend to behave more conservatively. This in turn influences household formation. On the weakest side of the spectrum, this can mean households recoupling or doubling up. Though that isn’t happening on any large scale, a prolonged period of weak consumer sentiment could eventually dampen willingness to shop for new housing options.

Headwind #3: The Halt in International Immigration (Plus Rebalancing Domestic Migration)

Though international migration statistics won’t be out for at least another few months, one can generally assume that international migration is going to come in not only well below its prior year levels, but potentially at its lowest level in many decades. The resulting impact will differ by place (some states rely more heavily on international migration than others) and by product type (varying appetite for Class A, Class B or Class C rentals, if not altogether alternative housing types outside of the market-rate sector), but regardless the slowdown in international migration appears to already be influencing some of the macro labor trends.

Consideration should also be given to rebalancing domestic migration trends. Though the early 2020s cycle and its rapid migration shift has understandably cooled, the question in the near-term is whether the cooling will continue. If so, that could hinder those states previously garnering a higher domestic migration capture rate (which also coincides with many states and metros where new apartment supply is the most elevated).

Headwind #4: Consumer Debt, but Particularly Student Loan Debt (and Potential Garnished Wages)

Consumer debt trends versus consumer sentiment is another example of the growing disconnect between data and reality. Data from the New York Federal Reserve’s Consumer Credit Panel shows that the share of outstanding delinquent debt – while up from the past few years – remains below its 2010s average. This is even true for student loan delinquencies, though the potential risk here is the recency and the speed at which these came back online. The headwind could then be whether there is a contingent of market-rate renters who are unable to launch as newly formed households, or those who decide to double up due to pending repayments. If this does materialize, this would likely be most impactful for Class A and Class B properties.

Ultimately, the data shows that the general consumer (and even more so the market-rate multifamily housing consumer) remains in good financial condition so this doesn’t appear to currently be a higher-risk contagion.

Headwind #5: Supply Eases in 2026, but Its Impact Won’t Disappear Overnight

Heading into 2025, there was an assumption that the pullback off the 2024 peak would translate to a bounce back in rent growth. Considering demand was still robust in 2025 (yet rent growth remained aloof), that stands as a testament to the delayed nature of supply’s impact. That is, the gap between supply delivering versus its absorption schedule. Further, 2025 – while technically below peak levels – would have been the largest single year of supply in four decades.

As such, the pace at which rent growth bounces back in 2026 may be not as simple as a reduction in supply. The more likely story is that local markets that are either further past their peak, or markets that have a significant year-over-year decline (Atlanta, for example, will see roughly 50% fewer units deliver in 2026 than 2025) may see more of a snapback effect than what transpires at the national level.

Bonus Headwind: The Pullback in Supply = Less Absorption (But Only in the Arithmetic)

One of the caveats when discussing demand in the housing sector is delineating the difference between “demand” and “absorption.” The former is best thought of as a holistic measure (though as a result, very difficult to mathematically capture) while the latter is more of an arithmetically derived figure (i.e., capturing the change in number of occupied units, which inherently relies upon new inventory being made available).

The previous paragraph could warrant its own blog (if not dissertation, for that matter), but from a purely mathematical perspective, the 2026 apartment market will almost certainly see fewer units absorbed than the past 12 to 18 months. But don’t mistake that softening absorption figure for an outright undoing of “demand,” as this could potentially be a misrepresented “headwind” in 2026.