National Vacancy Rates Projected to Rise in 2026
Economists from the National Association of Home Builders (NAHB) and other analysts project that U.S. multifamily vacancy rates will rise in 2026. The increase is expected as the delivery of new supply outpaces renter absorption. This trend suggests even premium urban neighborhoods may face increased competition and a potential softening in the market.
- While national multifamily starts are projected to fall by 5% in 2026 to 392,000 units, the market is still absorbing the 608,000 units delivered in 2024—the highest level in 38 years. - The national multifamily vacancy rate reached a record 7.3% in December, with rents falling 1% year-over-year; however, Chicago's market remains much tighter with a vacancy rate of 5.0% as of late 2025. - Chicago is bucking the national trend and is considered one of the most supply-constrained markets, with year-end 2025 rent growth at 3.4%—significantly outperforming national benchmarks. - Downtown Chicago's Class A apartment rents saw a 4.1% year-over-year increase by mid-2025, with average gross rents surpassing $3,200 for the first time. - Unlike oversupplied Sun Belt cities, downtown Chicago is slated for fewer than 600 new unit completions in 2026, one of the lowest levels of new inventory in years. - Factors contributing to the projected national slowdown include a softer labor market, reduced immigration, and slowing domestic migration trends, according to economists from the NAHB. - A new 28-story, 307-unit luxury apartment tower has been proposed for the corner of State and Elm in the Gold Coast, with construction planned to begin in June 2026 for a potential spring 2028 completion. - Another boutique luxury building with 58 units is in development at 65 E Banks, adding to the competitive landscape directly within the Gold Coast.
