Industry leaders gathered at IMN’s Single-Family Rental Conference in Scottsdale recently, and the prevailing sentiment was notably cautious. Across conversations with operators, investors, and developers in the SFR, build-to-rent, and multifamily space, a consistent theme emerged: softening demand, decelerating job growth, and restrictive immigration policies are creating genuine headwinds for both household formation and rent growth.
Nobody’s panicking, but the easy money phase is definitely over. Developers and investors are sharpening their operational discipline, being selective about new capital deployment, and positioning for opportunities that should emerge as construction costs stabilize and oversupply corrects itself.
Here are the seven trends shaping the rental market as we move deeper into 2026.
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1. Supply Glut Still Weighing on Sunbelt Markets
Peak delivery volumes across all rental sectors are hitting Sunbelt markets hard right now. We’re seeing extended lease-up periods and aggressive concession packages as operators compete for a smaller pool of qualified renters. New construction starts have dropped sharply because the math simply doesn’t work: weak fundamentals plus elevated borrowing costs plus uncertainty equals projects that won’t pencil.
The silver lining? This supply overhang is self-correcting. Today’s construction drought means tighter supply 18-24 months from now, particularly in markets that stop building today.
2. Demand Moderating as Migration and Job Growth Cool
Housing demand, including build-to-rent and single-family rentals, is cooling as domestic migration patterns shift and employment growth decelerates. Job and income growth are slowing while inflation pressures persist in other spending categories, capping both rent growth potential and renter affordability.
The data shows an interesting split: turnover remains historically low, and renewal rent growth is positive year-over-year. Existing residents are staying put and accepting modest increases. The challenge is on the new lease side, where homes are sitting vacant longer in markets still absorbing heavy delivery volumes.
Overall absorption as a percentage of new deliveries has improved in 2025 compared to 2024, but this relative improvement hasn’t translated to stronger rent growth yet. Markets heavily dependent on in-migration face particular uncertainty heading into late 2026.
3. Construction and Insurance Costs Finally Stabilizing
Here’s the first genuinely positive development: hard costs are flat to slightly down, and insurance inflation has meaningfully cooled. Industry operators are reporting moderation in both construction expenses and insurance premiums.
This matters enormously for underwriting. After years of volatile cost projections forcing conservative assumptions, developers can now model pro formas with reasonable confidence again. Predictability is returning to the development process.
4. Capital Remains Available but Increasingly Selective
Capital hasn’t disappeared; it’s gotten pickier. Well-capitalized institutional investors remain active and aggressive in pursuing quality opportunities. Smaller investors are pulling back, waiting for clearer signals.
We’re seeing rising interest in acquiring underperforming build-to-rent assets, which could trigger a wave of opportunistic buying over the next 12-18 months. Many industry leaders expect capital deployment to accelerate meaningfully once supply pressures ease and the broader economic outlook stabilizes. The money is there, waiting for better entry points.
5. Development Pipelines Slowing but Not Stopping
Most developers have paused or slowed projects due to high capital costs, constrained rent growth, and tighter lending standards. But well-capitalized operators are still selectively moving forward, focusing on premium locations and proven product types.
This disciplined approach will create much tighter supply in the medium term. Good development sites still exist, but finding them requires more rigorous, narrowly focused analysis compared to the 2020-2022 period when nearly everything penciled.
6. Operators Laser-Focused on Net Operating Income
With limited pricing power and reduced development activity, operators are doubling down on what they can control: resident retention, expense management, and service optimization. We’re seeing more disciplined operational execution across the board.
Effective property management and thoughtfully designed products continue to separate winners from losers, especially in oversupplied competitive markets. The operators who invested in quality systems and resident experience during the boom years are outperforming now.
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7. Long-Term Fundamentals Remain Strong Despite Near-Term Friction
Step back from the 2026 challenges, and the long-term picture for rental housing remains constructive:
Demographics favor rentals. The renter cohort will expand significantly over the next decade as Millennials and Gen Z continue facing affordability barriers to homeownership.
Future supply will be constrained. Today’s development slowdown guarantees reduced competition 24-36 months from now, particularly as older Class C inventory continues aging out.
Operational discipline is improving. The sector is maturing beyond the land-grab mentality of recent years.
Most industry leaders anticipate rental market performance improving in late 2026 and early 2027. The timing will vary by market and depend heavily on local employment trends and how quickly current oversupply gets absorbed.
To found out more, visit Rental Housing 2026: IMN Event on SFR, BTR.
