$1,820/UNIT
3,263 UNITS 649 UNITS 3,263 UNITS 4.3% 6.1%
Average Asking Rate
MULTIFAMILY POISED FOR STRONGER 2026
Multifamily vacancy in the Sacramento region stood at 6.1% as of the close of Q3 2025, down from the 6.2% reading of three months ago and one year ago. The market recorded positive net absorption to the tune of 649 units in Q3, with 10 of the region’s 12 distinct submarkets recording occupancy gains. Meanwhile, neither of the two submarkets that posted negative net absorption experienced significant losses. Both the Arden Arcade and South Sacramento trade areas recorded declines of fewer than five units that did not significantly move the needle on vacancy.
Folsom led all other trade areas in terms of occupancy gains, with positive net absorption of 153 units (primarily driven by Class A product) driving a decline in overall vacancy from 9.0% to 7.6%. Last year developers added multiple new projects to the Folsom market, adding nearly 1,000 new apartment units and sending overall vacancy to a high of 10.9% one year ago. These projects have steadily leased up, with Class A product leading the charge.
Downtown projects recorded 121 units of positive net absorption as vacancy here fell from 10.0% to 9.7% in Q3. Class B
Sacramento Multifamily Market Average Asking Rent Per Unit vs. Vacancy Q3 2025
projects dominated, accounting for 137 units of occupancy growth while Class A projects went backwards to the tune of -17 units. Natomas/North Sacramento followed with 78 units of positive net absorption, though this was not enough to offset the impact of the delivery of multiple new projects that added 303 new units to the local inventory. Vacancy now stands at 6.4%, up from 5.7% at the mid-year mark. Meanwhile, both the Davis and West Sacramento submarkets recorded positive net absorption of more than 50 units.
Through Q3, developers have added 17 new apartment communities across the Sacramento region, adding 2,530 new housing units to the local inventory. Suburban development took center stage in Q3. The largest delivery of the quarter was Hines’ 303unit Ona project in the Natomas/North Sacramento submarket. Meanwhile, Roseville saw the addition of USA Properties Fund’s 284-unit Terracina at Winding Creek as well as the 76-unit Cirby Creek Apartments in Roseville at 1650 Huntington Drive. The Elk Grove market added the 236-unit Pardes Apartments at 8310 Poppy Ridge Road and the 62-unit Cottages at Laguna at 8570 Center Parkway. The only new project to come online Downtown was D&S Development’s The Cypress. This eight-story, 92-unit project was delivered in August with rents ranging from $1,950 per month for studios to $8,900
Sacramento Multifamily Market
Vacancy Vs. Deliveries (Supply) & Net Absorption (Demand)
Sacramento Multifamily Market: Vacancy/Average Asking Rent Per Unit
per month for penthouses, making it the third most expensive apartment rental we are aware of in the Sacramento region. The highest asking rents also come from Downtown projects including $10,177 per month for a 1,033 SF 2-bedroom, 2-bath unit at the Eleanor H16 and $10,000 per month for a 1,550 SF 3-bedroom, 2-bath with garage at the Capitol Yards project.
RENTS
The current average asking rent per unit in the Sacramento region is $1,820 per unit, down from Q2’s reading of $ 1,824 per unit, but up slightly (+0.6) from Q3 2024’s reading of $1,810 per unit. On a per square foot (PSF) basis, the current market wide average is $2.19 PSF, up slightly from $2.18 PSF a year ago.
Rent growth has flattened in 2025. The current average asking rent for Class A remains where it stood a year ago at $2,314 per unit, or $2.53 PSF. Class B product has seen negligible growth of 0.3% from $1,921 per unit ($2.25 PSF) a year ago to $1,926 per unit ($2.26 PSF) today. Class C rents currently average $1,589 per unit ($2.01 PSF), up 1.2% from the $1,570 per unit ($1.99 PSF) reading of Q3 2024.
While rents have remained flat, we have anecdotally heard of landlords boosting concessions packages—typically free rent. Costar reports that concessions during Q3 were employed at nearly double the rate as last year with landlords in new properties using them to gain new tenants and owners of stabilized properties offering them on renewals to keep households in place.
LOOKING AHEAD
The market is on track to add roughly 3,000 new units this year. This marks a significant drop from the 4,361 apartments added in 2024, but the development pipeline remains relatively robust. We are currently tracking 19 projects accounting for 2,617 new units that are under construction with deliveries scheduled through Q2 2027.
The final quarter of 2025 will see some major projects delivered including Greystar’s 269-unit Grove at Woodland and Blue Mountain Enterprises’ 160-unit Medley Apartments (both in the Natomas/ North Sacramento submarket), Woodbridge Pacific Group’s 157unit Tricon Elk Grove, and EAH’s 140-unit On Broadway Downtown.
Leading trade areas for development in 2026 include Downtown (729 units under construction), South Sacramento (492), West Sacramento (432), Natomas/North Sacramento (429), Roseville/ Rocklin (359), and the Arden Arcade (176). Meanwhile, we are tracking 70 proposed projects across the region with many of these likely to go forward in the months to come.
Among the new projects in the works are Birchway Elk Grove, a 276unit market-rate project that began construction in September. The developer, Greystar, has been particularly active lately. In addition to the Grove at Woodland project they will complete in October 2025, they recently received approval from the Sacramento City Council to move forward on their planned 378-unit Birchway Natomas project in that submarket. Other developments we expect to go forward
Sacramento Multifamily Market
Avg.
Multifamily Market: Average Asking Rent Per Unit/Rental Growth Rate
include St. Anton Communities planned 168-unit affordable housing project Placer Creek—which would be the Placer Vineyards first affordable housing project.
But while we anticipate a steady construction pipeline heading into 2026 and beyond, we doubt that we will see a return to the aggressive levels of development the market experienced in 2023 and 2024. Sacramento continues to benefit from in-migration, primarily from Bay Area residents looking for greater affordability. While the population of California returned to growth mode in 2023, that masks a larger trend at play within the Golden State. Los Angeles and major Bay Area cities continue to see out-migration, with most of those residents heading inland for cheaper housing. Sacramento remains among the fastest growing large cities in California. Among medium-sized cities (30,000 people or more), Folsom and Rancho Cordova were the fourth and fifth fastest growing in 2024, with respective growth rates of 4.0% and 3.2%. That trend of Bay Area in-migration appears to be slowing, but so too is the region’s development pipeline.
Against that backdrop, we think rental demand for multifamily product will hold steady heading in 2026. Based on current levels of planned development that should translate into vacancy continuing to hover in the low 6.0% range. That said, it may be a challenging environment for rental rate growth.
INVESTMENT UPTICK COMING
From 2016 through 2020, the Sacramento market averaged 48 multifamily sales per year but since then it has averaged just 20 transactions annually. In 2024, we tracked just 19 sales across the region for a combined deal volume of $251.2 million. Through
Q3 2025 we were aware of 18 total deals, with the market likely to surpass last year’s level of activity—though deal activity has focused on smaller complexes accounting for only $135.2 million of total sales volume. The final quarter of 2025 will see that number grow though it is not likely to surpass 2024 totals—though one deal in the works is particularly notable. As this report went to press, a deal was about to close for The Cannery apartments in Davis that would rank as the highest price per unit transaction in 2025 to date. The 72-unit property was in contract to sell for $29 million, or $403,000 per unit. But, in what we see as an immensely positive sign, we are starting to see increased touring activity.
Deal flow began to decline following 2021 largely due to fundamentals. Vacancy hit a record low of just 3.1% in Q2 2021. Rental rate growth at that time was 10.7% year-over-year. And, of course, pricing surged, and cap rates fell. Those metrics also set off the surge in new development that has only recently begun to abate. Investors seeking better returns largely looked to other property types as gridlock between ask and bid set in. Rising interest rates following the 2022/2023 inflation spike didn’t help the matter.
Heading into 2026 we anticipate an uptick in multifamily investment activity. Market fundamentals both locally and nationally are starting to improve after the recent development wave of the early 2020s (this was as much a national as local trend).
Meanwhile, the September interest rate cut by the Fed will likely be a boost in the arm for real estate and will almost certainly be the first of multiple cuts. That cut—a 25-basis point reduction—isn’t likely to set off a flood of investment activity. But as this report went to press, Fed Chair Jerome Powell said that the Fed would likely cut its key interest rate at least two more times this year stating that “rising downside risks to employment have shifted our
assessment of the balance of risks.” We think this is likely to spur increased activity heading into 2026 even if the economy faces some turbulence.
Initial economic uncertainty regarding tariff impacts appears to be fading, with many companies that had paused moves earlier in the year returning to dealmaking. Consumer spending has continued to hold up far better than most early economist predictions, though many warn that the full impact of many tariffs has yet to hit the market. Meanwhile, unemployment remains near 50-year lows, but employment growth has been slowing substantially in recent months. September interest rate cuts from the Federal Reserve may help to change that, but the economic picture heading into the final months of 2025 remains cloudy. While US stock indices are all at or near historic highs, much of those gains in 2025 have been driven by companies at the forefront of artificial intelligence (AI) creation—with AI increasingly being cited as a driving force for layoffs and flattening employment growth. Risks remain but should a negative economic scenario play out in the coming year, multifamily will be the most insulated of commercial real estate property types because people need a place to live.
In virtually every US market there remains intense and sustained demand for more housing. The National Multifamily Housing Council and the National Apartment Association recently issued a study that found that 41% of all US apartments were built before 1980 and that to keep up with functional obsolescence alone at least 266,000 new units need to be built annually. The same survey found that 36% of Sacramento’s apartment stock was built before 1980, with at least 1,000 units needed annually to replace aging inventory. These numbers do not include anticipated population growth. In other words, there is a national housing shortage, and a downturn is not going to change this. While there may be some renters at the fringes of affordability that are priced out of the market or that must double up or move back in with their parents (as is the case in every downturn), multifamily rarely sees significant upswings in vacancy during downturns. For example, the Great Financial
