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Multifamily in Houston continues to struggle. Occupancy in Class A properties has ticked up but at the expense of Class B, C, and D occupancies. Even so, overall occupancy is down, and Class A rents have fallen below where they stood this time last year. There’s some relief in sight, however. New construction is trending down. If absorption holds steady, the Class A market should begin to rebalance next year with Class B, C, and D to follow soon afterward.

Developers delivered 26,377 apartments to the market in the 12 months ending September ’24, according to MRI Apartment Data. Houston has absorbed only 17,237 units in the same period. Construction has begun to taper off, however, with only 16,537 under construction as of early October.

Landlords continue to offer incentives to attract new tenants. This may include free rent, the waiver of a security deposit, or floorplan upgrades. As of October ’24, incentives impacted over half of all Class A units, roughly one-third of Class B and C units, and one in ten Class D units. The concessions have effectively reduced monthly rents by 5.0 to 7.0 percent across the board. 

Houston is not alone. Other Texas metros are struggling as well. In Austin, incentives are available on 57 percent of all apartments, in Dallas/Fort Worth on 39 percent, and in San Antonio on 46 percent.

Prepared by Greater Houston Partnership Research Department

Patrick Jankowski, CERP
Chief Economist
Senior Vice President, Research
pjankowski@houston.org