Over the past year, a general influx of supply has led to many Sunbelt regions witnessing a decline in rents. However, Houston is showing some resilience in that category, according to a report from Newmark.
The multifamily space in the city saw rents grow by 0.7 percent last year to an average of $1,274. While that may seem only modest, it's significant when put in a broader light. For example, Newmark highlighted that Houston was the only major Metropolitan statistical area (MSA) to experience rent growth in 2024. Since the first quarter of 2021, rents in the Houston MSA have spiked by seven percent.
"Houston’s strong population and employment growth, coupled with limited new construction, continues to drive upward pressure on rents," Newmark wrote.
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Last year, new supply decreased to 19,130, down from 25,545 in 2023. The 10-year average of new supply in the region is 18,318 — so the category was a little higher than ideal. But still, Class A units under construction account for just six percent of the total. Other major Texas markets including Austin (15.6 percent), San Antonio (12.3 percent), and Dallas (7.6 percent) made up a larger share.
Most importantly, Houston is projected to be the fastest-growing area in terms of population among the biggest U.S. metro areas from 2025 to 2029, Newmark said, citing data from Moody's.
Particulary Class A multifamily properties are in high demand. In 2024, 20,291 of those units were absorbed, which exceeds the previous five-year average by 35.2 percent.
Another important trend is wages have grown faster than rents. From 2022-2023, the difference was 5.3 percent. Annual wage growth has almost doubled from the national average.
In terms of multifamily occupancy, the rate was 88.6 percent, 10 basis points higher than in 2023.
Additionally, Newmark expects sunnier days ahead for Houston. The CRE firm expects rents to grow on an average of 1.8 percent annually in the city between 2024-2028. That would tie it for third among major Sunbelt regions in growth in the category with San Diego. The only two markets ahead of Houston would be San Francisco and Los Angeles, which are expected to see a two percent and 2.2 percent rise in rents during that span.
The Woodlands submarket, which experienced a 2.6 percent decline in rents in the fourth quarter, is expected to lead the way in growth from 2025-2028, at +4.3 percent. The Katy submarket is also projected to see a strong rebound from a 1.4 percent decline in the last three months of 2024 to 3.8 percent rent growth during the span.
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