Supply pressures have continued to cool Austin’s apartment market. Vacancy has risen by 80 basis points from the second to the third quarter. According to Matthews Real Estate Services, the current 15.3% vacancy rate is the highest the city has seen in over a decade. Austin has led the nation for months with the highest multifamily vacancy rate.

While record-high supply is the primary factor driving the skyrocketing vacancy and tumbling rents, the town’s strong economy will lessen the blow. Austin’s robust ecosystem of technology-related employers is expected to support continued in-migration and job growth throughout the rest of the decade. Although recent rent declines of nearly 5% reflect a near-term oversupply, average rental rates remain 10% higher than in 2019, ultimately underscoring the rapid rent growth experienced in 2021 and 2022.

With construction activity set to taper off in 2025 and 2026, vacancy rates are expected to stabilize. This will potentially allow for rent growth to return to positive territory next year.