New apartments are taking longer to fill than at any point in more than two years, a sign that the record wave of multifamily construction delivered over the past three years is still working its way through the market.
Just 41% of apartments completed in the first quarter of 2026 were leased within three months of completion, according to an analysis published Friday by the National Association of Home Builders, which tracks the U.S. Census Bureau’s Survey of Market Absorption of New Multifamily Units. That is down 5 percentage points from the prior quarter.
“This was the seventh consecutive quarter in which new apartments were absorbed at a rate below 50% and was the lowest absorption rate since the fourth quarter of 2023,” NAHB economist Jesse Wade wrote.
How the absorption rate works
The Census survey follows each quarter’s crop of newly completed apartment buildings and measures what share of the units has been rented at three, six, nine and 12 months after the certificate of occupancy. It is one of the few federal datasets that tracks lease-up speed rather than construction volume, which makes it a direct read on whether demand is keeping pace with new supply.
Historically, roughly half or more of new apartments filled within the first three months. Seven straight quarters below that mark points to a market where landlords of brand-new buildings are competing hard for tenants.
The lag shows up further out on the curve as well. Of apartments completed a year earlier — a cohort of 93,120 units — 89% had been absorbed after 12 months. That is the second-lowest 12-month reading in the survey’s history, behind only the 86% recorded for units completed in the first quarter of 2020, when the pandemic froze leasing activity.
Supply is finally receding
The pipeline itself is thinning. Builders completed 73,510 new multifamily units in buildings of five or more units in the first quarter, down from 77,980 the prior quarter and well below the 93,120 units delivered a year earlier — a drop of roughly 21% year over year.
That decline is the mechanism most likely to pull absorption rates back up over the next several quarters: fewer competing lease-ups per market. It also reflects the sharp pullback in multifamily construction starts that followed the run-up in financing costs, meaning the units being completed now were financed in a very different rate environment than the ones being started today.
Condominiums told a different story. The three-month absorption rate for new condominiums and cooperative units rose to 70%, well above the apartment figure, though on a far smaller base: 3,879 condo and co-op units were completed in the quarter, about 5% of all multifamily completions.
Rents on new units are still rising
Slower lease-up has not translated into cheaper new apartments. The median asking rent for apartments completed in the first quarter was $2,034, up 6.5% from $1,909 a year earlier, according to the survey.
That combination — slower absorption alongside higher asking rents — is the central tension in the data. It suggests owners of new product have been holding asking rents rather than cutting them to accelerate lease-up, a strategy typically supported by concessions such as free months that do not show up in a median asking-rent figure.
It is also worth noting what the median measures: newly built apartments skew toward higher-amenity, higher-rent product. RealtyWire reported earlier this year that buildings with 50 or more units captured 57% of 2025 multifamily completions, a mix shift that pushes the new-construction median well above the rent on the existing stock.
What it means
Verified: 41% of first-quarter 2026 apartment completions leased within three months, the seventh straight quarter below 50% and the weakest since the fourth quarter of 2023; 73,510 multifamily units were completed in the quarter, down about 21% from a year earlier; the median asking rent on new apartments was $2,034, up 6.5%.
Attributed: NAHB characterizes the reading as continued softness in absorption, noting the 12-month rate is the second lowest in the survey’s history.
RealtyWire analysis: the absorption data lag the market by design — first-quarter completions are only now being measured, and the units involved were started roughly two years ago, at the peak of the delivery cycle. The more forward-looking number in this release is the completion count. With deliveries down more than a fifth year over year and starts still subdued, the supply pressure that has depressed lease-up speed should ease through 2026 and into 2027 in most markets. The risk to that view is demand: absorption is a function of household formation and job growth as much as of supply, and a weakening labor market would keep lease-up slow even as deliveries fall.
For investors, the practical read is that underwriting assumptions on lease-up periods written during the 2021-22 boom remain too optimistic for deals delivering now, while acquisitions of recently completed, partially leased assets continue to offer negotiating leverage. That dynamic has already drawn capital into large portfolio trades, including the 895-unit Texas apartment portfolio acquired by Spirit Investment Partners and Strategic Value Partners. More coverage of the sector is collected on our commercial real estate page.
What to watch: the next SOMA release, covering second-quarter 2026 completions, and whether the three-month rate finally climbs back above 50% as the delivery wave recedes.
