Houston, TX Multifamily Market Report Q4 2025

Houston’s multifamily fundamentals remained under pressure in Q4 2025, with vacancy reaching a record-high 12.4% and net absorption slowing sharply. Quarterly absorption turned negative in late 2025 for the first time in three years, while annual demand ran roughly 30% below pre-pandemic norms. Asking rents declined 0.9% year-over-year, marking a sustained period of negative rent growth following the first contraction in more than a decade earlier in 2025.

Operators have largely prioritized occupancy over rent growth, relying heavily on concessions to compete with new lease-ups. Luxury properties have outperformed on an absorption basis, supported by reduced development starts and long-term affordability advantages versus homeownership, though even this segment has seen rent cuts. By contrast, workforce and mid-tier assets have experienced net move-outs, driven by economic stress and affordability pressures. Suburban submarkets in the northwest and southwest regions of the market continue to account for the majority of positive absorption, while many urban neighborhoods report elevated resident turnover.

Key Findings

Houston’s multifamily market remains oversupplied, with elevated vacancy and negative rent growth persisting as new deliveries continue to outpace demand, delaying a full supply-demand reset.
Leasing activity is increasingly bifurcated, with suburban submarkets and luxury assets capturing most absorption while workforce and mid-tier properties face sustained pressure.
Investment activity strengthened through late 2025 as pricing stabilized, financing conditions improved, and investors targeted value-add opportunities amid a cooling but resilient economic backdrop.

Houston Multifamily Supply & Demand Dynamics

Source: CoStar Group, Inc.

Houston Demographics

Source: CoStar Group, Inc.

Unemployment Rate: 4.4%
Current Population: 7,902,289
Households: 2,870,567
Median Household Income: $83,948

Houston remains one of the nation’s largest and fastest-growing metropolitan areas, supported by long-term population inflows and a relatively affordable cost of living. The metro’s population of approximately 7.9 million has expanded nearly three times faster than the national average over the past decade, driven by domestic migration and international inflows. Employment growth has moderated meaningfully, with job gains slowing from post-pandemic highs, though total employment still exceeds pre-COVID levels by more than 300,000 jobs. Oil and gas remains influential, but continued diversification into healthcare, life sciences, aerospace, and biomedical research provides structural support for long-term housing demand. The Texas Medical Center and the TMC3 project represent a major future employment catalyst, though near-term labor market cooling has dampened renter confidence.

Houston is the fifth most populous metro area in the United States.

2025 | Source: Greater Houston Partnership

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

Houston Multifamily Construction

Construction activity has moderated significantly, despite navigating a sizable wave of recent deliveries. Approximately 1,300 units delivered in late 2025, bringing the total number of deliveries since 2023 to more than 62,000. Roughly 13,000 units remain under construction, marking the smallest active pipeline since 2017 but still sufficient to keep vacancy elevated in the near term. New supply is concentrated in high-density urban submarkets and fast-growing suburban corridors, especially in the northwest and southwest portions of the metro. Looking ahead, the sharp pullback in construction is expected to gradually relieve supply pressure and support rent stabilization in late 2026 or early 2027. However, near-term competition among recently delivered assets will remain intense.

Units Construction Starts

Source: CoStar Group, Inc.

Units Under Construction

Source: CoStar Group, Inc.

Houston Multifamily Sales

Investment activity gained traction through 2025, with sales volume reaching approximately $81.5 million in Q4 as transaction counts climbed to a four-year high. Investor sentiment improved as bid-ask spreads narrowed and debt availability expanded, led by the GSEs alongside growing participation from debt funds, banks, and life companies. Average pricing settled near $150,000 per unit, while cap rates averaged approximately 6.6%, reflecting a more normalized risk environment compared to recent years. Transaction activity has been heavily skewed toward value-add and lower-rated assets, with more than four-fifths of trades involving Class C properties. Private capital continues to anchor the buyer pool, though institutional participation increased meaningfully and approached historical norms. Overall pricing is expected to remain relatively stable in the near term, supported by improving liquidity and long-term confidence in Houston’s demographic and economic trajectory.