After two years of rapid growth, U.S. apartment demand decelerated in the third quarter of 2025, falling significantly short of the supply volumes added during that period. According to RealPage data, rent cuts persisted across the U.S. apartment market in November 2025, as occupancy fell.

However, there are fewer expectations that rent cuts will get any more intense, and this brings our focus on residential REITs like Essex Property Trust, Inc. (ESS Quick QuoteESS - Free Report) , UDR, Inc. (UDR Quick QuoteUDR - Free Report) and Camden Property Trust (CPT Quick QuoteCPT - Free Report) . Let us delve deeper into data from RealPage and check these landlords’ chances of growth in 2026 despite broader macro uncertainty.

Occupancy and Rent Growth Falling

Rent growth is softening as many apartment owners shift to defensive leasing strategies aimed at maintaining occupancy instead of growing rents. The slowdown is mostly visible in new leases, whereas renewal rents continue to show relative strength.

According to RealPage data, U.S. apartment occupancy fell 10 basis points year over year to 94.8% in November 2025, the first annual decline since August 2024. Effective asking rents also dropped for the fourth straight month, down 0.4% in November and 0.7% annually, with the average effective rent at $1,852. However, after three months of steeper rent cuts, the pace stabilized in November, signaling a slowdown in the downward trend.

Despite the hiccups, we note that unaffordable homeownership and demographic trends are driving demands, while supply is easing, setting the stage for a healthy recovery in occupancy and rent growth in the upcoming year.

Regional Winners and Losers

The rent cuts haven’t hit every region equally in November 2025. The sharpest declines are showing up in many Southern and Western markets, while tourism-driven cities like Tampa, Nashville and Las Vegas are softening too.

In contrast, tech-focused coastal hubs such as San Francisco, San Jose and New York have seen slight rent increases, buoyed by optimism around artificial intelligence. Meanwhile, markets like Chicago, Virginia Beach, Cincinnati, Minneapolis and Pittsburgh have remained relatively steady with modest rent growth. St. Louis, in particular, stood out in November by moving up to the list of top-performing cities.

Economic Conditions Present a Mixed Picture

Macroeconomic conditions paint a mixed picture for the multifamily industry. Employment growth remains positive but has slowed compared to previous periods. In 2026, job growth is expected to remain soft; however, the unemployment rate should remain low enough to support steady increases in wages and household incomes. Despite concerns persisting around tariffs and their ripple effects on both consumers and the industry, inflation is largely under control.

While REIT stock performance may experience normal short-term volatility, the long-term outlook for multifamily housing remains healthy, supported by rising household formation, limited homeownership affordability, and favorable demographic trends.

Current economic conditions make renting a more attractive option than buying. Homeownership rates rose during the pandemic as sub-3% mortgage rates and lifestyle changes boosted homebuying, but rates have since declined. Even if mortgage rates decline, subdued new home construction will continue to restrict buying opportunities in the coming years.

Stocks to Consider for Steady Income in 2026

Essex Property Trust: This residential REIT’s substantial exposure to the West Coast market has offered ample scope to enhance its top line. The company expects that the West Coast market will continue to perform better than the U.S. average. Due to the high cost of homeownership, the transition from renter to homeowner is difficult, making renting apartment units a more flexible and viable option in 2026.

Looking ahead to 2026, the company’s portfolio is well-positioned compared with other U.S. markets, supported by lower levels of housing supply, attractive affordability and technology-sector-driven demand tailwinds. Management expects occupancy to improve in 2026 due to declining apartment supply and infrastructure investments in key markets like Los Angeles.

Currently, ESS carries a Zacks Rank of #3 (Hold). The Zacks Consensus Estimate for 2026 revenues is currently pegged at $1.96 billion, suggesting a 3.7% year-over-year rise. The Zacks Consensus Estimate for the 2026 core FFO per share of $16.28 also indicates year-over-year growth of 1.9%. Moreover, it has increased its dividend five times in the last five years, and its five-year annualized dividend growth rate is 5.11%, which is encouraging. With a decent balance sheet strength, the dividend payment is expected to be sustainable over the long run. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

UDR, Inc.: This residential REIT is well-poised to benefit from its diversified portfolio with a superior product mix of A/B quality properties in the coastal and Sunbelt markets. Efforts to leverage technological moves to enhance operational efficiency and drive margin expansion augur well. The combination of a broad shortage of housing in America, a continued decrease in new supply across most markets and the elevated cost of homeownership is likely to bode well for occupancy and pricing for the company in 2026.

Annual new supply completions in 2026 are projected to remain limited, averaging just 1% of existing stock across the company’s West Coast markets. Management expects this will lead to favorable market fundamentals in the coming quarters.

UDR carries a Zacks Rank of 3 at present. The Zacks Consensus Estimate for 2026 revenues is currently pegged at $1.75 billion. This indicates a 2.9% year-over-year rise. The consensus mark for 2026 FFO as adjusted per share of $2.56, implies a 1.1% rise year over year. Moreover, the company has increased its dividend five times in the last five years, and its five-year annualized dividend growth rate is 4.81%. Given UDR’s solid financial position, its dividend seems sustainable.

Camden Property Trust: Camden is well-positioned to gain from the healthy renter demand for its residential properties in the high-growth markets of the United States amid favorable demographic trends and high homeownership costs. Its focus on leveraging technology to drive margin expansion is encouraging. Its diversification efforts in urban and suburban markets are likely to drive stable revenues in 2026.

The company is taking a disciplined approach to position itself to remain strong on the occupancy side as it heads into next year. Management says that a significant amount of multifamily supply that was absorbed in 2025 will not have to be absorbed in 2026.

CPT carries a Zacks Rank of 3 at present. The Zacks Consensus Estimate for 2026 revenues is currently pegged at $1.61 billion. This indicates a 2.2% year-over-year rise. The consensus mark for core FFO per share of $6.94, indicates 1.4% rise year over year. Moreover, the company has increased its dividend six times in the last five years, and the annualized dividend growth rate for this period is 5.92%. Backed by strong operating fundamentals and solid balance sheet strength, its dividend distribution is expected to be sustainable in the upcoming period.

Here’s how ESS, UDR and CPT have performed over the past three months.

Price Performance

Image Source: Zacks Investment Research

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.