The Phoenix apartment market is showing signs of recovery, with strong renter demand helping offset the impact of elevated supply. The Valley recorded 23,000 units of net absorption over the past 12 months, significantly above the pre-COVID average of 7,200 units and ranking Phoenix among the top five U.S. markets for demand. At the same time, new construction has slowed, with 20,000 units delivered and only 17,000 units currently under construction—down 50% from the peak. This has helped vacancy improve to 11.1%, although it remains historically high.
Despite improving fundamentals, the market continues to face oversupply and rent pressure, particularly in Downtown Phoenix, Tempe, and the Southwest Valley. Average asking rents declined 1.5% year-over-year, while property owners continue offering significant concessions, including 10+ weeks of free rent at some newly built properties. Looking ahead, the shrinking construction pipeline should provide additional relief, with new deliveries expected to return closer to pre-pandemic levels by 2027. Vacancy is expected to gradually decline as the market absorbs recent supply, while rent growth will likely remain negative in the near term but should avoid the sharper declines seen in 2025.
Phoenix MULTIfamily Market FAQ
1. What is the current state of the Phoenix multifamily market?
The Phoenix multifamily market is showing signs of recovery after several years of heavy new construction. Demand has strengthened significantly, while the pace of new development has slowed, helping improve vacancy. However, the market is still dealing with elevated vacancy and negative rent growth.
2. How strong is apartment demand in Phoenix?
Demand remains one of the market’s strongest fundamentals. Phoenix recorded approximately 23,000 units of net absorption over the past 12 months, well above the pre-COVID five-year average of 7,200 units. This places Phoenix among the top five U.S. markets for apartment demand.
3. Is oversupply still a concern?
Yes. While the construction pipeline has slowed considerably, certain submarkets—including Downtown Phoenix, Tempe, and the Southwest Valley—still face higher risks of oversupply due to the large number of recently completed and under-construction units.
4. Is Phoenix still overbuilt?
Yes, although the situation is improving. About 17,000 units are currently under construction, which is 50% below the recent peak but still represents roughly 3.9% of existing inventory. Areas such as Downtown Phoenix, Tempe, and the Southwest Valley remain more exposed to oversupply.
5. What is the current vacancy rate?
Overall multifamily vacancy has improved to approximately 11.1%. While this is an improvement, vacancy remains near the highest levels seen since the recovery from the Global Financial Crisis.
6. Are apartment rents increasing or decreasing?
Rents are still declining. Average asking rents decreased approximately 1.5% year-over-year. Property owners are also using larger concessions, including significant discounts and, in some newly built communities, 10+ weeks of free rent to attract residents.
7. What is driving demand in Phoenix?
Relative affordability, employment opportunities, and continued population growth are supporting renter demand. Phoenix remains one of the fastest-growing markets in the country, which provides a strong underlying demand base for multifamily housing.
8. What is the outlook for Phoenix multifamily?
The outlook is cautiously improving. The rapidly shrinking construction pipeline should reduce supply pressure, with annual deliveries expected to move closer to pre-pandemic levels by 2027. Vacancy should gradually decline as the market absorbs the large amount of inventory delivered over the past few years. Rent growth is likely to remain negative in the near term, but a decline as severe as what Phoenix experienced in 2025 is not expected.
