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Apartment sector faces higher build costs as new supply absorbs
Connect CRE says absorption is improving as new construction slows, but rent growth remains held back by a still-leasing supply pipeline.
Connect CRE highlighted themes from its 2026 Multifamily Leadership Series for the apartment sector, featuring insights from 18 multifamily leaders collected in a downloadable report and presented individually.
The outlet pointed to the impact of any renewed rise in inflation and gas prices, saying those trends can push up building-material and contractor costs, which in turn raises construction expenses and adds pressure to budgets for new multifamily development.
Connect CRE also said absorption has increased this year after a major surge in new supply entered the market a couple of years ago. It attributed the improvement to a slowdown in new construction and noted that homeownership remains out of reach for many Americans, keeping more households renting longer and supporting steady rental demand.
On rents, Connect CRE said rents are generally flat with variation by market, including areas with negative rent growth in recent years and others with slight increases. It added that while there are early signs of stabilization, the main drag on rent growth is still the recent supply surge that has not yet been fully leased up, particularly affecting where lower-income households spend more of their income on rent.