MHN Asks: Where Is Rent Growth Strongest?

June 10, 2026

Thompson Thrift’s Matt Vance on supply-demand imbalances and what to expect for rental rates across the country.

Rent growth remains a market-by-market story, said Vance. Image courtesy of Thompson Thrift

Rental performance continues to show signs of strain across the country. Despite a 0.4 percent uptick year-to-date through April, rent growth was only one-third of the average seasonal increase recorded between 2012 and 2019, according to Yardi Matrix. Annual growth remained in negative territory, down 0.2 percent.

Constrained multifamily rent growth is coming from elevated levels of new supply and softening demand and stagnant absorption in recent quarters. Although a recovery appears to be taking shape, it is likely to develop gradually and unevenly across the country.

To understand how that’s most likely to take shape, MHN spoke with Matt Vance, chief marketing strategist & economist at Thompson Thrift, who joined the firm earlier this year. As of the first quarter of 2026, the company had developed more than 27,400 units totaling some $7.2 billion, with a presence across 24 states. Thompson Thrift recently entered the Nevada market and closed on the Thompson Thrift 2025 Multifamily Development L.P., a limited partnership offering that raised more than $255 million in total capital commitments.

What are the main indicators you watch when trying to evaluate where rent growth is headed?

Vance: Multifamily occupancy reflects the balance of supply and demand and is one of the most powerful indicators of rent growth trends. When supply outweighs demand, as it does today across many Sun Belt and Mountain region markets, occupancy falls below equilibrium, creating a tenant-friendly environment with abundant choices for renters. The result is weaker rent growth as landlords compete more aggressively on price through lower asking rents and greater concessions.

As supply is absorbed and occupancy improves, markets tighten, pricing power shifts back to landlords and rent growth strengthens. We’re already seeing this dynamic play out in several markets. In cases where supply ramped up earlier in the cycle, rent growth decelerated sooner and new starts declined earlier as well. Today, many of those pipelines have largely been absorbed and rent growth has turned positive again.

Atlanta is a good example of a market following that pattern. Supply peaked earlier there than in markets like Denver and Phoenix and, while rent growth remains slightly negative, it has improved in each of the last seven quarters and appears poised to turn positive this year. Rent growth itself is the first derivative of rents—the rate of change—but we’re equally focused on the second derivative: how rent growth is changing and where it’s likely headed in the near term.

Exterior shot of Drift, a Thompson Thrift community in Daytona Beach, Fla. The image features a swimming pool surrounded by palm trees, with buildings on each side — Completed in 2024, the 300-unit Drift community in Daytona Beach, Fla., spans across 30 acres. Thompson Thrift is both the owner and the manager of the nine-building property. *Image courtesy of Thompson Thrift*

Lastly, history remains an important longer-term indicator. Apartment rent growth has historically followed a relatively predictable trend, but remarkable post-pandemic demand pushed rents sharply above normal levels. Developers responded quickly to meet this housing demand with new supply, which softened fundamentals across many high-supply markets. Today, rents in some of those markets remain 10 to 15 percent below where they likely would have been under more normalized conditions, creating the potential for stronger future growth as markets rebalance.

Where are you seeing the healthiest balance between supply and demand right now and what’s driving that strength?

Vance: At a high level, most markets still exhibit healthy supply-demand dynamics. Developers correctly anticipated where renter demand would be strongest, and even in markets with large supply pipelines, new units are being absorbed. That said, many Sun Belt and Mountain region markets continue to face short-term pressure from elevated levels of remaining supply.

Conversely, markets such as Chicago, San Francisco and New York City currently have demand materially outweighing supply, which is supporting stronger rent growth.

The Midwest and Northeast have been the “Goldilocks” regions of this cycle and represent some of the best-balanced supply-demand conditions nationally. Demand remained steady following the pandemic, developers added supply more moderately and the result has been relatively stable occupancy and predictable rent growth.

Which markets do you think are best positioned for the next wave of rent growth and why?

Vance: Generally those markets where supply ramped up—and began normalizing—earlier in the cycle, occupancy is improving under healthy demand conditions, and rents have corrected to levels well below where they likely would have been under more normalized market conditions.

Many of these markets are now moving through the latter stages of supply absorption, which should allow pricing power to gradually shift back toward landlords over the near- to medium-term.

Are certain property classes starting to pull ahead on rent growth?

Vance: Nationally, rent growth across all classes remains relatively muted and is still negative in many Sun Belt and Mountain region markets where elevated supply continues to pressure fundamentals.

That said, Class A assets have consistently outperformed Class B and C properties throughout this cycle. Even in high-supply markets where rent growth is negative across all classes, Class A performs better than B and B better than C, with lower-tier assets weighing more heavily on overall market performance.

Part of this dynamic reflects affordability pressures facing lower-income households. Wage growth has been more limited in recent years and rent-to-income ratios remain elevated, forcing owners of lower-tier assets to compete more aggressively on pricing and concessions to attract and retain residents.

How are you balancing occupancy and rent growth when setting new-lease asking rents across your portfolio?

Vance: In markets where supply remains a near-term headwind, multifamily owners and operators are prioritizing occupancy over rent growth and focusing on maintaining healthy leasing velocity. The strategy has generally been effective in preserving occupancy, but it comes at the expense of top-line revenue through lower asking rents and greater concessions.

Thompson Thrift has followed a similar approach in markets experiencing elevated levels of new supply. Occupancy remains the priority for assets in lease-up status while we lean towards rent growth as we approach stabilization. Retention is a heavy focus.

Interior shot of a communal area at Verity, a Thompson Thrift property in Vero Beach, Fla. The image features a bar, sofas and a coffee table and a tv mounted on the wall. — The 276-unit Verity community in Vero Beach, Fla., has immediate access to the beach and the area’s largest employers. Completed last year, the property has resort-style features, including a resident social lounge. *Image courtesy of Thompson Thrift*

What gap are you seeing between renewal rent growth and new-lease pricing across the assets you own?

Vance: Nationally, renewal rent growth continues to outpace new-lease pricing. Renewal conversion rates have been rising for years as renters increasingly choose to stay in place longer for several reasons.

The affordability challenges within the for-sale housing market have placed homeownership out of reach for many renters, while the high moving costs also discourage relocation. At the same time, operators have become increasingly effective at delivering positive resident experiences and retaining tenants, even at modestly higher renewal rents.

The trend varies across markets, but Thompson Thrift is seeing similar patterns across our portfolio. On portfolio average, we are achieving minimal renewal rent growth as many expiring residents are leasing at or above current asking rents. We see this shifting in the fourth quarter or the first quarter of 2027 which should allow for renewal rent growth to rise.

Looking ahead, what could change the rent growth outlook by year-end, and what are your expectations for the next 12 months?

Vance: Because the supply outlook over the next several years is relatively well understood, the rent growth outlook depends heavily on the trajectory of renter demand. As a result, we are closely monitoring the macroeconomic factors that directly influence household formation and multifamily demand.

Most forecasters expect a stabilizing macroeconomic environment with modest economic growth and some improvement in labor markets, which should support healthier consumer sentiment and sustained renter demand.

However, if we experience prolonged economic volatility, persistently elevated inflation or a higher-for-longer interest rate environment, household formation and housing demand could soften. In markets still working through elevated supply pipelines, that would likely require operators to compete more aggressively through lower asking rents and greater concessions in order to maintain occupancy.