Market Spotlight: Dallas – Fort Worth

After slogging through the last few years, Dallas – Fort Worth multifamily appears to have finally turned a corner. The peak in deliveries for this cycle is in the rearview mirror and apartment demand has continued to gain momentum. This renewed balance between new supply and net absorption has produced the first average occupancy gain since 2021. Rent growth has responded to the improving environment.

All numbers will reflect conventional properties of at least fifty units.

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Demand Caught Supply

Net absorption has managed to outpace new supply so far this year. For some markets around the country, the new construction boom of the last five years was a new phenomenon. For Dallas – Fort Worth, high supply has been the norm for decades. As a result, net absorption surpassed new supply from January through July in only three of the past ten years. Only 2021 managed the feat on an annual basis.

This year, the margin has been slim. In the first seven months of 2025, nearly 19,000 net units were absorbed, while over 18,500 new units came online. The difference was less than 300 units.

Even so, this was a win given the context of recent years. In the same portion of the calendar for 2022 through 2024, new supply exceeded net absorption by more than 26,000 units. Taken as an average, new supply outpaced apartment demand by more than 8,700 units in each of those three years through July.

The improvement in demand has been broad-based. Stabilized properties saw net absorption return to positive territory in the period for the first time since 2021. Demand has also been encouraging for all four price classes. Class A and Class D have seen particularly strong year-over-year gains in net absorption.

Demand typically slows in the fourth quarter, and new supply does not always do the same. This year, the pace of deliveries is expected to decrease as the year moves toward a close. Another 10,000 or 11,000 new units appear likely to begin leasing before the end of the year. That would bring the annual total to around 30,000 new units for 2025. Annual deliveries will probably surpass annual net absorption this year, but new supply should winnow further next year.

Average Occupancy and Rent Growth Improvement

Average occupancy this year through July rose by 0.3% to 87%. Stabilized occupancy closed July a hair under 92% after eking out a small year-to-date gain as well. For both occupancy metrics, this year was the first time in positive territory for this portion of the calendar since 2021. The margin was small, and will likely be given up before the end of the year, but this year has been preferable to the substantial declines of recent years.

Average occupancy declined in 2022 by about 340 basis points. In 2023 the decline was approximately 260 basis points. This year, an annual gain is possible, but a decline of less than 100 basis points is more likely. 2026 provides a clearer opportunity for an annual occupancy gain. New supply should decline further, and apartment demand appears well-positioned to continue its multi-year positive trend.

Rent growth has started to respond to improving market conditions. Average effective rent for new leases was up 0.6% over the last twelve months ending in July. On a year-to-date basis, rent growth was 1.2% through July. Not since 2022 has rent growth had as much wind behind the sails.

Due to seasonal leasing slowdowns, rent growth typically flattens or dips slightly from August through December. With market occupancy still quite low, and lease concessions expected to proliferate further, it is hard to see 2025 considerably outperforming the norm. Therefore, this year will all but certainly be a third consecutive year with average effective rent growth below 3%.

As with average occupancy, next year appears to be a better target for more substantial rent growth. If steadily smaller occupancy declines can finally flip to sustained gains in 2026, lease concession availability could finally begin to recede and provide more momentum to rent growth.

Takeaways

For DFW multifamily, the year has played out about as well as could have been hoped for. New supply has started to ebb from last year’s peak. Apartment demand has continued its multi-year uptrend and has even picked up steam. Average occupancy has managed to gain a little ground, at least for now. Average effective rent has responded to improving conditions and has returned to positive territory.

Seasonal trends will begin to act as a headwind for apartment demand and rent growth in the coming months. New supply will probably ultimately outpace net absorption and drive occupancy downward to a modest degree by the end of the year. However, 2025 is shaping up to be another step in the right direction for a market on a slow but steady march back from a tough a volatile period. Even better, there is plenty to like about what this year’s performance could portend for 2026.

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