Monthly multifamily market intelligence for local, state, national, and global context. Published by NVest Analytics. Every figure is sourced and dated.
September 2026
Phoenix MSA. Multifamily
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The Month in Three Parts
How We Got Here
Phoenix was the institutional favorite of 2021 to 2022; the supply that followed pushed vacancy to 11.7% and rents into a two-year decline [95].
Nationally, construction fell to 475,000 units, 3.5% of inventory and the lowest since 2013 [27][28].
Agency 5-year quotes ran 5.14 to 5.29% in March [40] before the 10-year Treasury climbed from 4.19% on Jan 2 to 4.78% on Sep 4 [1].
The Fed committee held rates at 3.50 to 3.75% on Jul 29, but three members voted to raise them [17][18].
Arizona job growth was just 0.1% in 2025, the weakest outside a recession in decades [101].
Where We Are Now
Demand is outrunning supply: Q2 absorption near 6,000 units, more than 12,400 year to date, against fewer than 6,700 delivered in the first half [98]. Newmark counts 17,000 units absorbed, third nationally [83].
Vacancy is 11.3%, down 40 basis points in the quarter and from a year ago [95]; asking rent $1,536, still down 2.2% year over year, but rents rose in April for the first time since May 2024 [95][100].
Prices are rising into weak rents: average cap rate 5.8%, down 80 basis points in a year, at $266,672 per unit, up 3.6% [95].
Inflation is still above target: CPI 3.4% in July, PCE 3.7% in July [36][216]. SOFR is 3.66% [35].
Pricing gap: 5.8% cap rate vs. agency 5-year debt at 6.07% [40], negative leverage of about 27 basis points, among the narrowest of the markets we cover.
Population: metro Phoenix added 59,065 residents in the year to July 2025, fourth in the nation, at a 1.14% rate only Dallas and Houston beat among major metros [102].
Where We're Headed
Rates: futures markets price about a 58% chance of a quarter-point increase on Sep 16, after peaking near 66% following the Jackson Hole speech [217]. If it lands, agency 5-year fixed rates extrapolate to roughly 6.2 to 6.3% [1][40].
Supply: 15,974 units under construction, down 35% from a year ago and the lowest since early 2021; 2026 completions forecast at 15,000, down 25% [95][98].
Rents: with absorption roughly double deliveries, the year-over-year rent figure should cross zero by early 2027 if the pace holds [95][98][100].
Arizona jobs are forecast to grow 0.5% in 2026, Phoenix 0.7% [101]; the state's Office of Economic Opportunity projects 1.0% annualized [103]. Water policy is the structural constraint: no new groundwater-only assured-supply approvals in the Phoenix area since June 2023 [104].
Net: Phoenix is the market where buyers are most clearly ahead of fundamentals. Out-of-state capital paid $290K per unit in Midtown in August [105]; that only works if the rent recovery arrives on schedule.
What It Means for Phoenix
The rate direction has flipped. Three Fed votes to raise rates and a 10-year Treasury at 4.78% mean the "wait for cuts" plan is over for 2026. Owners with loans maturing in 2026 or 2027 should model a refinance at 6.0 to 6.5% [1][17][18].
Buyers are ahead of rents. Cap rates compressed 80 basis points to 5.8% and prices rose 3.6% per unit while rents fell 2.2% [95]. The bet is on the pipeline, not on current income.
The pipeline supports the bet. Under construction is down 35% to the lowest since 2021, deliveries down 25% this year, and absorption is running about twice deliveries [95][98].
Jobs are the weak link. Arizona grew 0.1% in 2025 and is forecast at 0.5% for 2026 [101]. Population, not employment, is carrying demand [102].
Water is the long-term gate. Groundwater in the Phoenix area is fully committed on a 100-year basis, so new supply outside water-served cities needs alternative sources; build-to-rent now needs assured-supply certificates too [104]. Existing stock benefits.
Phoenix Multifamily
Phoenix is absorbing its way out of the 2022 to 2024 supply wave. Year-to-date absorption of more than 12,400 units is roughly double first-half deliveries, vacancy has dipped to 11.3%, and rents posted their first monthly increase since May 2024. Investors have moved first: cap rates compressed 80 basis points to 5.8% while rents are still down 2.2% year over year.
The largest cities in the Phoenix-Mesa-Chandler, AZ metro. Rent and rent growth from Apartment List (Aug 2026); multifamily units permitted (buildings of 5+ units) from the Census Building Permits Survey. Permits lead construction by 12 to 24 months. Rows alphabetical; hover a row for detail.
Agency lending (Fannie Mae and Freddie Mac) remains the workhorse: a combined $176 billion cap for 2026, half of which must go to affordable housing. As of Aug 31 low-leverage agency loans price in the mid-5s and higher-leverage quotes sit just above 6% [40]. Across all multifamily products, quotes run 5.43% to 6.63% [220]. CBRE put the average multifamily loan spread at 162 basis points in Q2, 15 tighter than a year ago, with lenders competing on price rather than leverage [219]. Bank bridge money runs SOFR plus 225 to 325 basis points, debt funds SOFR plus 300 to 450.
Agency Multifamily Rates, 2026 Trend
Freddie Mac indicative 5-year fixed at 1.25x debt coverage and 65% loan-to-value, top of the published range. One source throughout. Hover the points.
Source: BWE Market Rates [40], one rate sheet at three dates (Jan 20, Mar 9 and Aug 31, 2026). Indicative levels only; Freddie Mac prices each loan individually and does not publish pricing.
Lending Landscape
Programs, caps, and terms relevant to Phoenix owners.
Arizona's economy is rebounding from a weak 2025, but slowly. State job growth was 0.1% last year and the Eller College forecast calls for 0.5% in 2026, with Phoenix at 0.7%; the state's Office of Economic Opportunity projects 1.0% annualized through mid-2026. Population growth, not hiring, is carrying apartment demand.
Sources: Eller College Economic Outlook [101]; Arizona Office of Economic Opportunity [103].
State-Level Operating Factors
Costs and policy that hit Phoenix net operating income directly.
Factor
Status
Read-through
Property insurance
Exposure to wildfire, flash flood and severe storms drives multifamily premiums [108]
Less severe than Texas or Georgia; still rising
Property tax
Maricopa County Assessor 2025-2026 Full Cash Value analysis published; multifamily change not itemized in the public summary [109]
Arizona's Prop 117 caps annual limited-value growth at 5%
Population and migration
Metro Phoenix +59,065 in the year to Jul 2025, #4 U.S.; 5.23M, +1.14% [102]
Only Dallas and Houston grew faster among major metros
Water policy
No new groundwater-only assured-supply approvals in the Phoenix AMA since June 2023; HB 2722 extends the requirement to build-to-rent [104]
Constrains new supply outside water-served cities; supports existing stock
Peer metros (Q2 2026)
DFW rents -1.6 to -2.1% YoY [22]. Atlanta vacancy 7.2% [82]. Charlotte vacancy 4.0% [99]
Phoenix leads the group on absorption
National Rates and the Fed
The Fed held at 3.50 to 3.75% in July with an unusual three-member vote in favor of raising. Futures now put a quarter-point increase at the Sep 15 to 16 meeting at about 58%, after the Jackson Hole speech pushed the odds as high as 66%. The 10-year Treasury closed Sep 4 at 4.78%, its highest of the year, and August payrolls came in at 162,000 with unemployment steady at 4.1%.
Sources: Federal Reserve [17]; U.S. Treasury, Sep 4 [1]; BWE rate sheet, Aug 31 [40]. Decomposition is illustrative; spreads vary by leverage, term, and borrower, and a 5-year agency loan is priced off the 5-year index, not the 10-year.
10-Year Treasury vs. 30-Year Mortgage Rate, 1980 to today
Why apartments rent: the mortgage rate sets the cost of buying a house, and the gap between it and the Treasury is the part of that cost the market has added since 2022. Monthly averages, percent. Lower panel: mortgage rate minus Treasury, in percentage points. Hover for any month.
Sources: FRED series DGS10 [191] and MORTGAGE30US [192], monthly averages of daily and weekly data, refreshed each build (2026-09-04).
Global Backdrop
Global bond yields moved higher again as central banks turned from cutting to tightening. The European Central Bank raised its deposit rate to 2.25% in June, the Bank of Japan reached 1.00% for the first time since 1995, and the Japanese 10-year crossed 3% on Sep 2. Energy prices are elevated on Strait of Hormuz supply disruption, which adds to inflation.
10-Year Government Bond Yields
Where the U.S. sits vs. peers. Hover a bar for context.
Sources: U.S. Treasury, Sep 4 [1]; Bank of England, Sep 2 [209]; Deutsche Bundesbank, Sep 4 [210]; Japan Ministry of Finance, Sep 3 [211]. All four are the issuing authority's own published series.
Global Policy and Risk Snapshot
Central-bank posture and macro risks that feed into Phoenix borrowing costs.
Factor
Status
Why Phoenix cares
European Central Bank
Deposit facility 2.25%, raised from 2.00% effective Jun 17, 2026 [212]
The first ECB increase of this cycle; keeps global yields anchored higher
Bank of England
Bank Rate 3.75%, held Jul 30; next decision Sep 17 [209]
Gilt yields still rising to 4.70%, an inflation worry [209]
Bank of Japan
Policy rate 1.00%, raised Jun 16 and held Jul 31 [213]. JGB 10-year 2.97%, above 3% on Sep 2 [211]
Less Japanese demand for Treasuries, so higher U.S. yields
Oil and energy
Elevated Brent $96.02, WTI $91.48 on Sep 1; Hormuz flows 4.9 million barrels a day in Q2 [214]
Minus for inflation and Fed posture; no local energy offset
U.S. dollar
Index 99.16 on Sep 4, down 0.5% over the month and up 1.4% year to date [38]
A weaker dollar makes U.S. property cheaper for foreign buyers
Sources: European Central Bank [212]; Bank of England [209]; Bank of Japan [213]; Japan Ministry of Finance [211]; EIA [214]; Trading Economics [38].
BWE: Market Rates, as of Aug 31, 2026 (Fannie Mae DUS and Freddie Mac conventional fixed-rate ranges by term, DSCR and LTV tier); earlier BWE sheets as of Jan 20, 2026 and Mar 9, 2026 via the Internet Archive
Disclosures. Compiled Sep 4, 2026 from publicly available sources; figures are as reported by each source on the date shown and have not been independently verified. Where sources conflict, the range is shown. Items marked "Data unavailable" were not published or not captured in the period. Not investment advice.
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