February 25, 2026

Houston multifamily market transaction activity accelerates to close the year

Q4 2025

Houston multifamily market overview

Completions declined at a rapid rate in 2025, but the heightened supply growth of 2023 and 2024 is still being felt in the Houston multifamily market. Projects totaling roughly 14,100 units came online in 2025, down 45% from last year’s peak levels. While supply growth trended lower, the vacancy rate continued to rise at a modest pace. During the past two years, vacancy has not recorded an increase of greater than 20 basis points in a quarter. Vacancy trends varied across the region. During 2025, submarkets with lower inventory growth, such as Baytown/San Jacinto River East and nearby Cloverleaf/Channelview, posted the greatest vacancy improvements of 250 basis points and 210 basis points, respectively. Rental rates were relatively flat in 2025 following four consecutive years of gains. Despite inching lower by 0.1% during the past year, the stability of the market’s apartment rents remain one of Houston’s strengths. Comparatively, rent trends have been more volatile in the other major Texas markets in recent years.

The Houston multifamily investment market continues to build momentum after limited activity in 2023 and 2024. Total sales during the fourth quarter outpaced levels recorded in the third quarter by 44%, and annual transaction counts exceeded levels recorded in 2024 by 39%. Houston has traditionally been a market where properties across the vintage spectrum sell at a high frequency, and this was particularly true in 2025. Sales were very evenly mixed across decades from the 1970s to the 2020s, with each accounting for roughly 15% of the sales mix during the past year. Cap rates continued to trend higher during the fourth quarter, averaging 6.0%. Rates averaged 5.7% in the preceding three months.

Looking ahead

Property fundamentals in the Houston multifamily market are expected to improve in 2026, as supply growth is forecast to be modest again in the coming year. Projects totaling roughly 11,000 units are scheduled for completion in the coming year, lagging the region’s trailing 10-year average by roughly 30%. The continued decline in new supply will likely lead to the region’s first annual vacancy improvement since 2021. Furthermore, the projected decrease is forecasted to be steep. Vacancy is expected to decline by 50 basis points in the coming year, which would mark the region’s greatest improvement since 2018. As supply decelerates and vacancy declines, rent growth should rebound in the coming year. Rent gains in 2026 are expected to closely track levels recorded in 2024, when rents advanced by 3.1%.

Sales activity in the Houston multifamily investment market should continue to build on the momentum created in 2025. Assuming fundamentals improve and supply growth continues to trend lower, the market will be well-positioned for a continued rebound in the coming quarters. Total sales during 2026 are expected to outpace levels recorded during the past year and will likely reach traditional levels. Additionally, Houston’s ability to generate sales volume across all vintage types will bode well for the market. Consistent sales of all property types point to very few weak points in the market and should provide plenty of opportunities for all types of investors. Cap rates are projected to continue to average around 6.0% in the near term but may dip down to the mid-5% range by the end of 2026.