The U.S. apartment market is slowly shifting back toward landlords' favor as the wave of pandemic-era construction starts to fill up.

Apartment concession use eased in July for the second consecutive month, with 15.8% of stabilized units offering some type of discount, down 70 basis points from June, according to Realpage. Concessions remain elevated from historical rates and even the recent past, but the monthly downward shift could be an early sign that landlords are regaining pricing power. 

The average discount equates to nearly six weeks of free rent on a 12-month lease, with a widening divergence based on quality as concession usage falls for the highest-quality properties but rises for Class-C assets. 

Class-A apartments were the only segment where concession usage is down year-over-year, according to RealPage. That split comes as U.S. apartment vacancy fell below 9% for the first time since 2024 in the second quarter, according to Cushman & Wakefield. Absorption, the net difference between move-ins and move-outs, was up 8% year-over-year to 124,600 units, the strongest demand since mid-2024. 

The 8.9% vacancy rate at the end of June was down 35 basis points from the prior quarter and marked the first meaningful decline in vacancy after a year of stability.

The uptick in demand is helping to work through a wave of deliveries from projects that broke ground during the pandemic, and that pipeline continues to shrink as new starts also dip. 

Multifamily construction starts were down 7.1% year-over-year and 15.6% from the prior month in July to 421,000 units, the U.S. Census Bureau disclosed Tuesday. The significant dip in new development comes after multifamily starts had ticked up at the start of the year. 

“Development activity is likely near its cyclical trough. First-half starts totaled roughly 110,000 units, the lowest since 2012, and the pipeline points to further declines through 2027,” Cushman & Wakefield analysts wrote in their second-quarter sector report. 

The 329,000 multifamily units that delivered in July were a 14.8% decrease from the prior month and a 25.6% dip from a year ago. That easing flow of new deliveries is relieving some pressure on Class-A landlords.

Analysts from Apartments.com, the online listing platform owned by CoStar Group, upgraded their multifamily outlook this month and now predict that vacancy will fall to 8.2% by year-end and that rents will grow by 1.4% in the third quarter.

“The near-term rent growth outlook reflects second-quarter rent trends slightly exceeding expectations,” Grant Montgomery, national director of multifamily analytics at CoStar Group, said in a statement. “The upward revision of second-half 2026 rent growth is driven by stronger employment assumptions and the significant progress made in the first half of the year in absorbing the excess inventory.”