After several years of record apartment construction and rising vacancies, the Phoenix multifamily market is finally showing signs of stabilization. A new CoStar report ranks Phoenix among the 10 most improved apartment markets in the country, driven by slowing construction, improving occupancy, and a better balance between supply and demand.
Key Takeaways
- Phoenix ranked among the top 10 most improved multifamily markets nationwide.
- Apartment vacancy declined from 12.3% to 11.7% over the past year.
- Vacancy is forecast to continue improving, reaching approximately 10% in 2027 and 9.5% in 2028.
- New apartment construction has slowed significantly, reducing the supply pressure that weighed on landlords over the past two years.
- Rent growth is still slightly negative but is expected to turn positive during the second half of 2026.
- Leasing concessions are also expected to become less common as market conditions improve.
Supply and Demand Are Moving Back Into Balance
Phoenix has spent the last several years absorbing one of the largest apartment construction booms in the country. Thousands of new units entered the market, creating fierce competition among landlords and leading to increased vacancies, rent concessions, and slower rent growth.
That trend is beginning to reverse.
The Valley’s supply-demand balance has improved from -1.6% in June 2025 to +0.1% in June 2026, signaling that renter demand is finally catching up with new supply. At the same time, the percentage of apartments under construction has dropped from 6.6% to 4.0% year over year.
Construction Is Slowing
Approximately 1,800 apartment units were delivered during the first quarter of 2026, a 25% decline from the same period last year.
While more than 26,000 apartments remain under construction, nearly half are expected to be completed before the end of 2026. That means competition among apartment communities will remain elevated in the short term, but the pace of new deliveries is slowing enough to allow demand to gradually catch up.
Rents Remain Affordable
Current market data shows:
- The average Phoenix one-bedroom apartment rents for approximately $1,300 per month.
- That’s roughly 22% below the national average.
- Average rents are still about 3.6% lower than one year ago.
What This Means for Arizona Real Estate Investors
For single-family investors, this is another indication that the Phoenix rental market is moving back toward normal after an unprecedented wave of new apartment construction.
As apartment vacancies continue falling and concessions become less aggressive:
- Competition from newly built apartment communities should gradually ease.
- Rental pricing should become more stable.
- Landlords may regain pricing power over the next 12–24 months.
- Well-managed properties that provide excellent customer service, responsive maintenance, and competitive pricing should be well positioned as the market continues to recover.
Bottom Line
The Phoenix apartment market isn’t booming again just yet, but it is healing. Slower construction, improving occupancy, and declining vacancies all point toward a healthier rental market over the next several years.
For Arizona real estate investors, that’s encouraging news. As supply and demand move back into balance, the market should become more predictable, creating a stronger environment for both apartment owners and single-family rental investors.