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Multifamily housing continues to struggle in Houston. Average occupancy rates are around 90 percent across all property classes. Rents are stagnant or have even fallen in the last two years. Developers continue to build too much. And incentives dominate the market.

Since July 2023, developers have built nearly 21,800 prime apartments; the market has absorbed only 18,600 of them. Average rents for recently opened properties have fallen by 12.8 percent over the past two years. This has put pressure on rents for established prime properties, which have fallen by 2.6 percent over the same period. In a more balanced market, rents would rise by three to four percent annually.

Landlords continue to offer incentives to attract new tenants. These may include free rent, waiving a security deposit, or floor plan improvements. As of July 24, the incentives affected over half of all Class A units, one-third of Class B and C units, and one in seven Class D units. The concessions have effectively reduced monthly rents by 5.0 to 7.0 percent overall.

Houston is not alone. There are problems in Texas and other major cities as well. In Austin, 54 percent of all apartments are eligible for incentives, in Dallas/Fort Worth for 40 percent, and in San Antonio for 47 percent.

Prepared by the Research Department of the Greater Houston Partnership

Patrick Jankowski, CERP
Chief Economist
Senior Vice President, Research
[email protected]

Leta Wauson
Head of Research
713-844-3661
[email protected]