Austin’s multifamily market has hit a turning point, with rents picking up for the first time in three years. 

The market continues to plod through oversupply that forced rents down and pushed landlords to rely on concessions to draw new tenants.

But in the second quarter, effective rents rose 1.8% to $1,316 per month after 12 straight quarters of decline, according to a Northmarq report. Market analysts expect to see steady rent growth within the next one to two years, offering a boon to investors who have been coming back to the market.

“The market is now approaching an important inflection point,” said Marcy Phillips, Crescent Communities managing director of central and North Texas.

From 2020 through 2025, Austin was one of the country’s fastest-growing cities as it attracted waves of new workers during the pandemic due to its lower taxes. Developers responded by building at breakneck speeds — apartment inventory rose about 33% in those five years, according to a Marcus & Millichap report, pushing vacancy up and rents down. 

Austin's multifamily market is a national outlier in how much supply was delivered and how far rates have fallen, Matthews senior associate Richard Waterhouse said in an email. 

“The closest comparison is probably San Antonio 18 months ago,” Waterhouse said, referencing a similar overbuilding challenge there.

But he said he doesn’t know of a market that has experienced such a “drastic” period of oversupply as Austin.

“Even without a rate spike, rents were doomed,” he said.

Vacancy peaked in the third quarter of 2024 at 15.8% and has since been trending downward, dropping to 12.3% in the second quarter this year, according to a Matthews report.

Effective rents were still down 3.9% year-over-year in the second quarter after factoring in concessions offered by landlords, according to Matthews. But their rate of decline has slowed sharply, down from 7.4% the year prior.

Now, with new deliveries slowing and excess inventory clearing, rents are reversing course, analysts say. At a national level, multifamily demand is strengthening as absorption reaches its highest level since 2024 and vacancy falls. 

“The last time we saw quarter-over-quarter rent growth was fall of 2022,” Ryan McBride, managing director of capital markets at JLL, said in an email.

Rents “have bottomed out,” and he expects “to start seeing real improvement in apartment fundamentals moving into 2027 and 2028.”

Waterhouse predicted that rental rates will be “flat to slightly up” over the next 12 months, and after that, “growth will be steady.”

Even though some analysts are tepid on the short-term picture, many executives are optimistic that the market will bounce back more quickly than expected.

“I wouldn't be surprised if you see double-digit rent growth here at some point over the next 36 months,” Cross Moceri, co-CEO at Presidium Group, said at Bisnow’s Austin Multifamily Conference on Sept. 10. 

“Maybe that's being the optimist that all builders and developers have to be, but it took this kind of confluence of events to get us where we are today — high interest rates, rents declining, oversupply, high construction costs. It's not going to be one thing that changes the trajectory.” 

Garrett Karam, chief investment officer at investment company Embrey, said some submarkets will experience significant growth over the next one to two years. He pointed to the central business district and adjacent submarkets that are already on the path to recovery, with low supply and economic development momentum.

“Once that happens, I think the terms come back in favor of the development community,” he said during the Bisnow event.

Growth Will Take Time

Despite signs of market recovery and optimism among developers, Austin’s supply environment will remain “constrained” as the market chips away at deliveries, Karam said.

“I hope it does loosen up a little bit, but it's not going to be a switch that flips,” he said.

Some submarkets won’t see rent growth right away, according to Phillips, such as the East Austin submarket, due to its abundance of supply. East Austin leads the metro with approximately 2,473 units, or 14.4% of inventory, under construction, according to the Matthews report.

The supply glut has forced many developers to offer concessions — temporary incentives like discounted rent, reduced fees or utilities, and free amenities meant to draw in and retain tenants. Austin led individual U.S. markets in concessions as of July, with 37% of stabilized units offering them for renters, according to RealPage Market Analytics.  The city’s average discount was 15.2%.

“Market-wide, it looks like concession burnoff, rather than headline growth,” will impact rental rates, Waterhouse said, adding that some markets are offering as many as 10 weeks of free rent.

“If they drop that to six weeks, that is 8.3% growth, even though the advertised number doesn’t change.”

Austin surpassed 1 million residents in 2025, a more than 4,000-person increase from July 2024, thanks to a robust job market and steady in-migration. But as rents start to grow, investors should still be cautious when making new deals until values and rents show obvious signs of recovery, Matthew Bunch, managing director of development for Mill Creek Residential, said during the event. 

“You have to be really realistic and position your value to the market,” Bunch said. “That’s why we really need values and rents to turn in the other direction.”

When the market does return, “everybody’s going to realize Austin is the hot spot” for development again, Moceri said. 

“We’re going to look back in five years and be surprised by how quickly things were reestablished here,” he said.