Multifamily construction outpaces demand in Houston

Despite exceeding the 20-year average for net absorption in 2023, Houston's multifamily market saw occupancy rates fall to their lowest point since 2020 due to new construction outpacing demand. Rising mortgage rates, insurance costs, and affordability concerns are pushing more people to rent, including long-term, contributing to the increase in net absorption. This trend is further fueled by Houston's population growth, as the nation's 5th largest metro area, which drives demand for rental options.

While effective rent growth in Houston slowed to its lowest level since 2020, at 0.4% year-over-year, the city's overall cost of living remains attractive, ranking fourth lowest among the most populated U.S. cities. Due to these factors, Houston is a prime choice for renters seeking long-term stability in a vibrant market.