Rates, Retention, Supply

By Garrett Williams, MSF · Founder & Managing Partner, PTP Partners — September 2, 2026

I’ve been banging this drum for a while now. Rates. Retention. Supply.

Back in earlier editions, I laid out two things I thought would define this cycle: rates staying higher for longer than most people wanted to admit, and the edge shifting from buying right to running right. I wasn’t the only one saying it, but I said it early and I said it often.

Now the data is catching up to the thesis. Other operators are seeing the same things I’ve been talking about. It’s showing up everywhere, from Fed commentary to boots-on-the-ground operating reports.

Rates aren’t done being a problem

Fed Chair Kevin Warsh pledged to ease price pressures on Friday, noting that higher rates may be necessary with inflation having stayed above the Fed’s 2% target for more than five years. He stopped short of saying whether he’ll push for a hike at the Fed’s September 15-16 meeting, but his tone was hawkish enough that futures traders moved fast. The odds of a September hike jumped from roughly 35% to nearly 58% overnight. Three Fed officials already dissented last month, pushing for a quarter-point hike now.

Some economists think traders overreacted. Maybe. But this isn’t a rates-are-coming-down story anymore. It’s a rates-might-go-up-again story. I flagged this risk months ago. Here it is, playing out in real time.

Operations and retention are the edge now

This is the other half of what I’ve been writing about. Morgan Properties’ COO put it plainly this week: the next phase of multifamily rewards discipline, not momentum. Renter demand is positive, but it’s not strong enough to soak up all the supply still sitting on the market. Rent growth is staying muted through the rest of the year.

So the winners won’t be the operators chasing rent growth. They’ll be the ones protecting economic occupancy, controlling costs without gutting service, and keeping residents in place longer.

Here’s the number that tells the real story: concessions hit 16.9% of stabilized U.S. apartments in May, the highest monthly share since mid-2014. That’s owners buying occupancy instead of earning it. Renters are staying in rental housing longer too, nearly 80% of household growth last year came from renters, not buyers, as homeownership stays out of reach. That’s a demographic tailwind. But it only pays off for operators who actually invest in the resident experience instead of just tossing out another month free.

Technology is part of that discipline now too. Not as a nice-to-have, but as a way to catch problems earlier and make better decisions across a portfolio.

And now supply is starting to fade

This is the third piece, and it’s the one that’s newest to the story.

Multifamily starts fell 7.1% year over year in July, and 15.6% from June alone. Completions dropped too, down nearly 26% from a year ago. Permits ticked up slightly, so this isn’t fully over, but the pipeline that’s flooded the market for two years is finally draining.

Yardi Matrix now expects new supply to bottom out in 2027 at around 444,000 units, and they don’t expect a return to 2024-2025 delivery levels anytime soon. Higher long-term rates are part of why. They’re limiting new construction the same way they’re limiting single-family building, which keeps more would-be buyers in the rental pool.

It’s not uniform. Some markets, especially parts of the Southwest Florida coast, still have over 15% of their housing stock under construction. Supply will stay a headwind there for a while longer. But nationally, the wave that’s been suppressing rent growth is starting to recede.

Where this leaves us

Put it together and you get the setup I’ve been talking about for months: rates staying stubborn, operational discipline separating winners from everyone else, and the supply wave that’s been weighing on rent growth finally starting to break.

This isn’t a moment to chase momentum. It’s a moment to execute. The operators who protect occupancy, control costs, and build real retention will be the ones still standing when supply clears and pricing power comes back.

I’ve said this before. I’ll keep saying it until the market stops proving me right.

Thanks for reading Edition 10 of The Basis. If this added value, forward it to someone who should be reading it.

— Garrett

The Basis is a biweekly newsletter covering multifamily market data, underwriting frameworks, and investment strategy.