MARKET · JUNE 29, 2026

Monday Market Update: The Apartment Glut Is Clearing

Multi-family permits just hit their lowest since 2016, more than 60% below the 2023 peak. The oversupply is unwinding, and forecasts point to rents turning positive between late 2026 and mid-2027.

The Signal

This week's notable data is about apartments, not houses. Multi-family building permits in Greater Phoenix climbed steadily through the 2010s, from just 240 units in the January-to-May window of 2011 to 8,392 in the same window of 2023. The Census Bureau's latest count, released this week, shows only 3,303 for that period in 2026. That is more than 60% below the 2023 peak and the lowest reading since 2016. The 2021 to 2023 surge was built on heavy in-migration and expectations of strong rent growth, but it overshot into an oversupply that is now working itself out. More than 25,000 units were delivered in the past year, another 17,000 are still under construction, and vacancy is projected to reach 11.7%.

Permits are low because new projects no longer pencil. Rents sit below their 2023 levels, property managers are offering concessions on roughly 60% of advertised rentals to hold vacancy down, and construction loans are both harder to get and more expensive. Phoenix is not alone here; Austin overbuilt on a similar timeline and is running even higher vacancy. As for the turn, forecasts cluster around late 2026 to early 2027 for year-over-year rent growth to go positive, and even then at below-average rates. With completions projected to fall nearly 50% in 2026, the supply side is finally correcting, which is the necessary first step toward recovery.

The Numbers

On the for-sale side, active listings excluding under-contract sit at 24,965, down 4.0% from a year ago. Under contract counts moved to 8,225, up 8.3% year over year. Pending listings hit 4,723, up 6.1%. The Cromford Market Index sat at 81.4, essentially flat from 81.8 last month but up 13.1% from a year ago. Months of supply rose to 3.6 from 3.2 last month, level with a year ago. Listing success rate fell to 68.3% from 73.4% last month. Sale-to-list ratio firmed to 97.32%. Average sale price jumped to $629,588, up 7.0% YoY, while the median held at $455,000, up 1.2%. Monthly dollar volume reached $4.32B across the metro.

What This Means for the High End

The apartment correction sounds like a renter's story, but it carries a clear signal for owners at the top, and the recovery will not be uniform. The forecasts that exist point to the affluent corridors leading the way out. The East Valley and the North Phoenix to Scottsdale corridor are described as the best positioned submarkets, supported by higher-income residents and steady job growth in healthcare and white-collar fields. Class A product, the newest and most expensive rental tier, is expected to firm up first as completions fall by nearly half in 2026. The heavily supplied submarkets, Downtown Phoenix, Tempe, and the Southwest Valley, are the ones expected to lag well into 2027.

That pattern lines up almost exactly with the for-sale market. The same affluent areas leading the rental recovery are the ones surging on the sale side: Scottsdale rose 9% on the Cromford index this week, Paradise Valley 15%, and Fountain Hills 16%, while Tempe fell 17%. Whether you look at rentals or resales, the strength is clustering where the higher-income buyers and renters are, and the softness is concentrated in the most heavily supplied, more affordable submarkets. For a high-equity owner, the takeaway is that the oversupply headlines describe a Class B and C apartment problem in specific geographies, not a weakness in the high end.

There is also a practical read for anyone weighing an investment property or a move. With supply and demand in rough balance for the first time since 2021 and new construction pulling back hard, the conditions that produced years of rent concessions are starting to reverse, first in the premium corridors. That does not make every rental a buy, and the heavily supplied pockets still carry real risk. But it does mean the part of the market tied to affluent demand is the part already turning, on both sides of the ledger. Knowing which submarket and which tier you are in matters more than any single metro-wide rent or price number.

What to Watch

Inflation reasserted itself this week. The PCE index, the Fed's preferred gauge, rose 4.1% year over year in the May reading released June 25, the hottest in three years, with core PCE ticking up to 3.4%. That reinforces the higher-for-longer posture the Fed signaled at its June meeting, and it keeps a possible rate hike on the table rather than a cut. The typical 30-year fixed sits near 6.5%, with the 10-year Treasury stuck against a ceiling around 4.45%.

The one genuine bright spot is oil. As the conflict in Iran winds toward a ceasefire, crude has fallen back toward pre-war levels, which should ease inflation over time and take some pressure off rates, provided the peace holds. For Phoenix, the elevated-rate backdrop is the same force squeezing the financed middle of the for-sale market and starving apartment construction of cheap capital, while the equity-and-cash luxury tier keeps pulling away. This is a short holiday week, so expect rates to stay range-bound unless the jobs data surprises.