Single-Family Rentals Outpacing Older Multifamily in Houston

Houston has been called the most stable multifamily market in Texas. But older, class B and C apartments are losing occupants while single-family leasing grows.

Single-family leases and inventory grew in the first half of the year compared to last year, according to the Houston Association of Realtors. Just under 24,000 leases were signed between January and June this year, a 5 percent increase year over year. New listings grew 13 percent year over year to 36,448.

The Houston area set a record for rental house inventory in June, when new listings of single-family homes jumped 12.7 percent year over year to 7,117. Last month, 4,590 single-family leases were signed, marking a 5.2 percent year-over-year increase.

Apartments, especially older stock, aren’t experiencing the same growth.

Houston’s multifamily market has avoided the rent declines that hit other Texas metros in the past two years. While Austin and Dallas turned negative in 2023 and 2024, rents in Houston continued to tick up, according to CoStar.

That’s due in large part to slower multifamily development in Houston. Deliveries are braking after a record-setting construction year, according to Northmarq. More than 15,000 units per year have been constructed for the past five years, but just 3,750 multifamily units opened in the first quarter, the lowest quarterly total since late 2022, which followed a high-water mark season of multifamily investment. About 12,000 multifamily units are expected to open this year.

Multifamily occupancy in Houston rose modestly last year, compared to the rate of decline throughout 2022 and 2023. However, absorption and occupancy are sagging for older apartments, according to Greater Houston Partnership. Class A properties are propping up Houston’s overall multifamily market, having absorbed 19,064 units in the past 12 months and chalked a 3.3 higher occupancy rate year over year in June. Class B, C and D apartments shed occupants over the past year, losing 624 units.

While overall occupancy in the first quarter was flat compared to the previous quarter, Class A quarter-over-quarter occupancy rose to 83.9 percent, according to Colliers.

It’s possible that ample single-family inventory is siphoning renters from apartments. Buoyed by a building rush, Houston’s record-setting supply of rental homes offers more opportunities for tenants looking to get out of aging multifamily properties, HAR secretary and treasurer Troy Cothran said.

“The increase in availability of homes allows some people to have a chance to find a home, where they would have had to settle a year ago, because there’s a lot more out there for them to pick from,” Cothran said. “A lot of times people end up renting apartments because they just can’t find the home that works for them.”

On the investment side, newer builds are attracting more attention. Properties built after 2010 made up 40 percent of multifamily purchases this year, following a year when most purchases were properties from the 1970s, according to Northmarq.