First quarter multifamily rent growth came in at 0.4 percent year over year nationally according to RealPage data published April 22. The print marks the eleventh consecutive quarter where annual rent growth has run below the long-term 2.7 percent average. Occupancy held at 94.5 percent across the 150 largest markets. New supply delivered in the quarter totaled 122,000 units, the highest quarterly number since 2008. Absorption ran at 138,000 units, slightly above deliveries.
Sun Belt softness continues. Austin year-over-year rent growth is negative 5.1 percent, the seventh straight quarter of declines. Phoenix is negative 3.2 percent. Atlanta is negative 1.8 percent. Charlotte is negative 1.4 percent. Nashville is flat at negative 0.2 percent, an improvement from negative 1.1 percent in the fourth quarter of 2025. Tampa is negative 0.7 percent. Orlando is positive 0.4 percent. Raleigh is positive 0.6 percent. The deliveries pipeline in these markets peaked between Q3 2024 and Q1 2025 and is now working through the absorption side of the cycle.
Coastal markets recovered. New York metro rent growth is positive 4.7 percent year over year. Boston is positive 4.1 percent. Washington DC is positive 3.6 percent. Northern New Jersey is positive 3.4 percent. San Francisco is positive 2.8 percent, the first positive print since 2022. Los Angeles is positive 1.4 percent. Seattle is positive 1.1 percent. The coastal recovery is driven by limited new supply, return-to-office mandates that have pulled some renters back into urban cores, and continued white-collar job formation in finance and technology hubs.
Build-to-rent single family inventory continues to grow. Single family rentals delivered through purpose-built communities reached 78,000 units in 2025 according to Yardi Matrix. Lennar, D.R. Horton, AMH Living, and Tricon Residential led delivery volume. Phoenix, Dallas-Fort Worth, Charlotte, Atlanta, and Tampa accounted for 64 percent of completed BTR units. Average rent for new BTR product is $2,180 per month versus $1,850 for traditional multifamily in the same metros. The premium is justified by larger floor plans and private yards.
Concessions remain elevated. National average concession in Q1 2026 was 1.4 months free on a 12-month lease, up from 1.1 months one year ago. Sun Belt markets averaged 2.1 months free with Austin at 2.6 months and Phoenix at 2.4 months. Coastal markets averaged 0.6 months. Operators in oversupplied submarkets continue to use upfront concessions rather than face rents to maintain reported asking rent levels. Effective rent growth lags asking rent growth by 88 basis points based on RealPage trended methodology.
Cap rates moved tighter through the quarter. Class A cap rates averaged 5.4 percent in primary markets and 5.7 percent in secondary markets per Real Capital Analytics April update. The compression of 40 basis points from the December 2024 peak reflects expectations of Federal Reserve cuts and a return of debt liquidity to the multifamily sector. Fannie Mae and Freddie Mac multifamily originations totaled $39 billion in Q1, the highest quarterly volume since Q4 2022. Agency rates for stabilized property are quoted in the 5.85 to 6.15 percent range for ten-year fixed.
Distressed sales picked up modestly. National multifamily distressed transaction volume reached $4.2 billion in Q1 2026 per MSCI Real Capital Analytics, up from $2.8 billion in Q1 2025. Houston, Phoenix, and Atlanta accounted for the bulk of distress. Most distress traces back to 2021 and 2022 vintages with floating rate bridge debt and aggressive underwritten exit cap rates. The wave is expected to persist through 2026 as 2022 vintage bridge loans hit maturity. Recovery rates on distressed sales averaged 67 percent of original cost basis.
Operating expenses continue to pressure net operating income. Insurance premiums rose 14 percent year over year nationally. Florida and Texas led with insurance increases above 22 percent. Property taxes rose 6.4 percent on average across the 150 largest markets. Repairs and maintenance increased 3.8 percent. Payroll for on-site staff rose 4.2 percent. Aggregate operating expense growth of 5.7 percent against rent growth of 0.4 percent has compressed net operating income margins by 180 basis points across stabilized portfolios.
For investors evaluating multifamily as part of a diversified portfolio, the picture is mixed but improving. The wall of supply that hit the Sun Belt in 2024 is now mostly absorbed, with deliveries falling sharply in 2026 and 2027 because construction starts collapsed in 2023 and 2024. Markets that were oversupplied last year will swing back to rent growth by late 2026 and into 2027. Underwriting deals at flat year-one rent growth, conservative occupancy, and 5.5 to 6.0 percent cap rates produces sensible math. Avoiding bridge debt and committing to longer hold periods remains the lesson from the 2021-2023 vintage class.