Rents picked up. Concessions didn’t. What to plan for in 2027 budgets.
Asking rents are growing at the fastest pace since early 2023. The average concession hit a record this year. A 2027 budget has to hold both.
- U.S. asking rents rose 2.3% year over year in the third quarter, to $1,950, the fastest pace since early 2023, per Cushman & Wakefield. Vacancy fell to 8.6%, its lowest since the third quarter of 2023.
- Concessions have not followed. Colliers put the average concession at a record $129 per unit in the first quarter, on about a quarter of all units.
- Operators are already bracing. In NMHC’s October survey, more apartment executives called their markets looser than tighter. Budget 2027 on effective rent by expiration and submarket, not on the headline asking rent.
Apartment rents are growing faster than they have in more than three years.
Cushman & Wakefield’s Q3 2026 Multifamily MarketBeat put U.S. asking rent growth at 2.3% year over year, to $1,950. That is the fastest pace since the first quarter of 2023, up from a 1.1% low in the first quarter of this year. Vacancy fell to 8.6%, its third straight quarterly decline.
After two years of supply-driven softness, that is the number most 2027 budget decks will open with.
It is also the least useful number in the deck.
The headline measures asking rent. A budget has to forecast what residents pay after the free weeks, the waived fees and the renewal offer. On that measure, the turn has not happened yet.
The turn in the headline is real
Demand held up. Supply ran out.
Cushman & Wakefield counts nearly 350,000 units absorbed through the first three quarters of 2026, up 14% from a year earlier, against about 250,000 delivered, down 25%. Census Bureau data point the same way. Completions in buildings with five or more units ran at an annualized 339,000 in September, down 20% from a year earlier, and starts fell 26% to 349,000.
The pipeline is the thinnest in more than a decade. Fewer than 480,000 units are under construction, 3.6% of inventory, the lowest share since 2013.
That is a real change, and it deserves a place in the budget. It is not the whole budget.
Concessions did not follow
The concession data tells a different story from the rent index.
Colliers research put the average concession at $129 per unit in the first quarter of 2026, a record. About a quarter of units carried one, and the discount equaled 7.2% of asking rent. That is below the 9.2% peak of the financial crisis. It is not a market that has stopped discounting.
Operators describe the same choice. CBRE’s midyear outlook says landlords are prioritizing occupancy over rent growth and using concessions to attract and keep residents. Where supply is tight, the burnoff has started. Cushman & Wakefield reports Class A concession usage below 2.5% across its own managed portfolio in the second quarter.
It will not move quickly everywhere else. Writing in Forbes, housing economist Brad Hunter called concessions sticky. After three years of six-weeks-free banners, renters shop for the special, negotiate for it and walk without it. In his words, expectations do not reset as quickly as occupancy does.
That is the gap a 2027 budget has to price. Hunter puts it directly: concessions have masked the gap between the asking rent and what renters actually pay. The headline index does not tell you how wide that gap is at your properties. Your rent roll does.
Renewals carry 2027
The renewal line matters more in 2027 than it has in years.
Residents are staying. CBRE points to historically high renewal rates as a support for operating income. Cushman & Wakefield calls renewal trade-outs in its managed portfolio exceptionally healthy, led by Class A, with overall trade-outs near 2% in the second quarter. Hunter adds one reason: with the 30-year mortgage rate at 7.28% on October 1, fewer renters are leaving to buy.
High retention is not the same as high renewal growth. In markets where new-lease rents fell for two or three years, in-place rents have had time to meet the street. A renewal increase carried forward from last year assumes a gap that may already be closed.
So rebuild the renewal line property by property. Start from the difference between what each resident pays today and what the unit would lease for tomorrow, including the concession a new resident would get.
Q4 decides which 2027 you are budgeting for
The next read on the market is softer. In NMHC’s October survey of apartment executives, summarized by Chandan Economics, the Market Tightness Index fell to 47 from 57 in July. Below 50 means looser conditions. 26% of respondents called their markets looser than three months earlier, against 21% tighter. Operators are heading into the slow winter leasing season with less pricing confidence than they had in summer.
Capital is tighter still. The same survey’s debt financing index fell to 10 and its equity financing index to 17. Owners under financing pressure tend to protect occupancy first, which keeps concessions on the table in their submarkets.
The national number also hides how uneven the recovery is. In CBRE’s second-quarter figures, 33 markets still had negative year-over-year rent growth. The Midwest led at 2.0%, with the Northeast at 1.7%. The Mountain region fell 3.7% and South Central 2.8%. San Francisco rose 11.4% while San Antonio fell 5.8%.
The outlook is better, but it is not fast. CBRE forecasts 1.4% rent growth for 2026 and a five-year average of 2.8% a year. Hunter calls 2026 the turning point and 2027 the year pricing power returns, with the job market as the biggest risk. Supply relief has an end date too. Multifamily permits rose 1% year over year in September, to an annualized 503,000, even as starts fell.
A national figure averages markets running from -5.8% to 11.4%. Your budget lives in your markets, not in the average.
What to plan for in 2027 budgets
Six moves for the 2027 budget, in the order the numbers get built.
- Budget effective rent, lease by lease. Hunter’s advice to owners is the right frame for operators: a budget that assumes an overnight return to face rents in 2027 will disappoint, and a budget that models a lease-by-lease burnoff, matched to the expiration schedule and local supply, will probably find upside it has not priced in. Take the expiration schedule, attach the concession each lease was signed with, and burn it off month by month as the lease rolls. That is the revenue budget. The asking-rent assumption is a footnote to it.
- Build the number up from the submarket. In the second quarter, rent growth ran from -5.8% in San Antonio to 11.4% in San Francisco, and 33 markets were negative. A national or regional average is not a budget assumption for any single property. Pull the trend for each market you operate in and roll it up.
- Give renewals their own line. Retention is high, so renewals carry more of the revenue. Check in-place rent against the street for every property. Where the gap has closed, renewal growth is whatever the market gives. Where in-place rent still trails asking, there is trade-out left, and that gap is the renewal budget.
- Budget a concession glide path, not a cliff. Hunter expects operators to step down from blanket discounts to targeted ones, such as waived fees, a couple of weeks free on hard-to-lease floor plans or a winter move-in special, before dropping them. Plan in that order, with each step timed to the submarket rather than to the calendar.
- Write a Q4 checkpoint into the budget. NMHC’s October survey already shows more operators calling their markets looser. If asking rents hold through the winter, the upside case is live. If they slip, push the burnoff out a quarter and flatten the concession glide path. Set the trigger now so January is a decision, not a debate.
- Map deliveries against your properties. Completions are falling, but they have not stopped: 339,000 a year at September’s pace. A lease-up opening near you sets the concession floor in your submarket for most of its first year, whatever the national trend does.
Where this lands operationally
A lease-by-lease budget only holds through the year if two things are true on the ground. The team knows the week a comp in the submarket pulls its special. And the person running the renewal conversation can see the whole relationship, not a thin record.
That is the work Compete, Union’s market intelligence, was built for. It tracks competitor asking rents, availability and concessions by floor plan in your submarket, and alerts the team the moment a comp changes price or drops a special. The glide path follows the submarket instead of the calendar, and the adjustment is a change on the record rather than an export and a meeting.
Renewals run on the same record as the original lease. The renewal owner opens with the resident’s full history, AI handles the 60-day reminders and the routine outreach, and the rate conversation stays with a person. In a year when the renewal line carries more of the revenue, that conversation is where the budget is won or lost.
Both live in the same platform the team leases from. That is the difference between a budget assumption and a weekly operating decision.
Common questions about 2027 multifamily budgets
Are apartment rents growing again?
Yes. Cushman & Wakefield put U.S. asking rent growth at 2.3% year over year in the third quarter of 2026, to $1,950, the fastest pace since early 2023. Vacancy fell to 8.6%.
How large are apartment concessions right now?
Colliers put the average concession at a record $129 per unit in the first quarter of 2026. About a quarter of units carried one, and the discount equaled 7.2% of asking rent.
Are renewals still a source of revenue growth?
Retention is strong. CBRE cites historically high renewal rates, and Cushman & Wakefield calls renewal trade-outs in its managed portfolio exceptionally healthy. How much a renewal can grow depends on how far each resident’s rent trails the market at that property.
What rent growth should a 2027 multifamily budget assume?
Build it market by market. CBRE forecasts 1.4% rent growth for 2026 and a five-year average of 2.8% a year, but in the second quarter markets ranged from -5.8% to 11.4%. Budget on effective rent, net of concessions, at the submarket level.
Should a 2027 budget assume concessions go away?
No. Renters have learned to expect them, and the average concession set a record this year. Model a gradual burnoff by lease expiration, timed to when competitors in the submarket pull their specials, and keep a targeted concession line for hard-to-lease floor plans and the winter months.
See Compete and Renewals running on your own submarket.
Sources: Cushman & Wakefield, U.S. Multifamily MarketBeat, Q3 2026, October 14, 2026. Cushman & Wakefield, Top trends across the C&W multifamily portfolio, Q2 2026 edition. CBRE, Q2 2026 U.S. Multifamily Market. CBRE, U.S. Real Estate Market Outlook Midyear Review 2026: Multifamily. Colliers, Quick Hits: Concessions Are Buying Time for Multifamily Fundamentals, May 20, 2026. U.S. Census Bureau, New Residential Construction, September 2026, October 20, 2026. Chandan Economics, NMHC Apartment Market Survey: 3 Takeaways, October 22, 2026. Forbes, Brad Hunter, Rental Demand Continues To Surprise To The Upside, October 8, 2026.