The chart below shows year-to-date multi-family permits in Maricopa and Pinal Counties. If you wish to see the other counties in Arizona, please visit the Cromford Public section of our site.
From 2011 through 2023, we witnessed a strong growth in building permits for multi-family units. Looking at the numbers for January to May each year, they rose from just 240 units in 2011 to 8,392 in 2023. But over the last 3 years, they have fallen out of favor. The latest year-to-date count for May 2026, released this week by the Census Bureau, is 3,303. This is more than 60% down from the 2023 number, and the lowest seen since 2016.
In hindsight, we can see that 2021-2023 was unusual – there was strong investment based on the back of inward migration patterns and the prospects for good rent growth. However, this boom quickly led to an oversupply that is now unwinding. Over 25,000 new multi-family units were delivered to the market in the last year, and another 17,000 are still under construction. Vacancy rates are expected to reach 11.7%. We are in a correction, and building fewer units is a necessary prerequisite to recovery.
New building permits are low because many projects no longer pencil out. Average rents are lower now than in 2023, and property managers are offering concessions on about 60% of advertised rentals in hopes of preventing high vacancy rates from affecting their buildings. Construction loans are harder to get and more expensive.
The Greater Phoenix area is not alone; Austin, TX, is seeing even higher vacancy rates and saw a similar boom in construction between 2021 and 2023.
When will rents start to climb again?
Forecasts cluster around late 2026 to early 2027 for YoY rent growth to go positive, but with important caveats:
- Forecasts call for Phoenix effective rents to start rising again in late 2026 or 2027, and even then likely at well-below-average growth rates. Concession usage may not peak until the latter half of 2026, after which freebies will slowly burn off.
- With completions projected to fall by nearly 50% across the market in 2026, Class A fundamentals are expected to strengthen first and potentially regain momentum in rent growth.
- The East Valley and North Phoenix-Scottsdale corridors are best positioned, supported by affluent residents and steady job creation in healthcare and white-collar industries.
Supply and demand are now in rough balance for the first time since 2021, but Downtown Phoenix, Tempe, and the Southwest Valley continue to face oversupply risks. Those submarkets are likely to lag the general recovery.
The market-wide YoY rent number is most likely to turn positive sometime between now and mid-2027, depending on how quickly the remaining pipeline is delivered and absorbed. Class A in East Valley/Scottsdale could cross into positive territory sooner; heavily supplied areas like Tempe and Downtown Phoenix probably won’t see higher rents until well into 2027.