TUCSON, ARIZONA (Sept. 9, 2026) — Tucson’s multifamily market showed a meaningful rebound during the second quarter of 2026, with vacancy falling sharply, renter demand strengthening and investment sales activity posting its most active first half in several years, according to Northmarq’s Q2 2026 Tucson Multifamily Market Insights report.
The market’s vacancy rate fell 100 basis points during the second quarter to 7.7 percent, marking the largest quarterly improvement since late 2020. Vacancy is now down 110 basis points from a year earlier. At the same time, asking rents rose during the quarter to an average of $1,149 per month, although they remained 0.6 percent below year ago levels.
The improvement was driven in large part by a surge in renter demand. Net absorption totaled 1,725 units during the first half of 2026, nearly triple Tucson’s long term first half average and sharply higher than the roughly 300 units absorbed during the same period in 2025. Northmarq characterized the first half as the strongest demand performance of the current cycle.
The decline in vacancy was particularly pronounced in several submarkets. Oro Valley/Catalina recorded a 490-basis point year over year decline, bringing vacancy to 4.2 percent, while Southeast Tucson vacancy fell 440- basis points to 4.8 percent. Northmarq forecasts that overall Tucson vacancy will continue to improve modestly during the second half and finish 2026 at approximately 7.5 percent, which would represent the first annual vacancy decline since 2020.
Rent performance, however, remains uneven across the market. Average asking rents increased 0.6 percent during the second quarter to $1,149 per month. Class B properties recorded the strongest year over year performance among property classes, with rents increasing 4.1 percent to $1,371 per month. Southeast Tucson led all submarkets with annual rent growth of 3.4 percent, bringing average rents there to $1,533 per month, while Tucson Mountain Foothills rents increased 2.1 percent to $1,334.
Class C properties remain the softer segment of the market. Northmarq reported that declines in Class C rents offset annual gains among Class A and Class B properties. Even so, Class C conditions have begun to improve, with rents posting a slight recent increase and vacancy declining to 8.2 percent at the end of the second quarter after exceeding 10 percent at the end of 2025.
The improving fundamentals are occurring ahead of a substantial wave of new supply.
Only 378 multifamily units had been delivered through midyear, but nearly 3,600 units were under construction. Construction levels were down about 6 percent from a year earlier but remained 26 percent above the trailing five-year average. Northmarq expects approximately 2,700 units to be completed in Tucson during 2026, more than twice the market’s five-year average level of new supply.
At the same time, the development pipeline beyond the current construction cycle appears to be thinning. Permits had been issued for just over 250 units through the first half of the year, down 19 percent from the same period in 2025. Northmarq forecasts approximately 500 multifamily units will be permitted for the full year, roughly half the level recorded last year.
That combination sets up one of the most important questions for Tucson multifamily owners and investors during the remainder of 2026: whether renter demand can continue to absorb units quickly enough as the pace of completions accelerates.
Northmarq expects the Oro Valley/Catalina submarket to be particularly sensitive to new deliveries because it has the market’s largest concentration of construction relative to one of its smaller existing apartment inventories. A similar pattern recently occurred in the South Tucson/Airport submarket.
Investment activity also strengthened during the first half of the year. Tucson recorded its most active first half for multifamily transactions since 2022. The median sale price reached $140,900 per unit, approximately 18 percent higher than in 2025, although still about 6 percent below the market’s 2022 peak. Cap rates averaged approximately 5.5 percent and have remained largely stable since 2024.
Central Tucson and the East Side accounted for most of the transaction activity, each representing roughly one third of sales. Transactions were almost evenly divided between Class B and Class C properties, with no Class A properties trading during the first half. Most sales involved older properties constructed between 1965 and 1985.
Northmarq expects investor interest to remain near its current pace as improving rents and declining vacancy strengthen the market’s operating fundamentals. With much of this year’s new construction concentrated in Tucson’s northwestern and southern submarkets, the report expects Central Tucson and the East Side to remain leading areas for multifamily investment sales activity. Cap rates are expected to remain relatively stable in the near term.
The local employment picture is also showing modest improvement. Tucson employers expanded payrolls by 0.2 percent year over year, adding approximately 800 workers. Northmarq forecasts the market will add roughly 2,000 jobs during 2026, a 0.5 percent annual increase, after employment contracted during much of 2025.
Looking ahead, Northmarq forecasts average Tucson asking rents will rise approximately 2.7 percent during 2026 to about $1,160 per month, which would be the strongest annual rent gain since 2022.
The second half of 2026 therefore becomes a test of the strength of Tucson’s multifamily rebound. Demand has accelerated, vacancies are falling and investment activity is recovering, but approximately 2,700 new apartments are expected to enter the market before year end. Whether absorption can continue to stay ahead of those deliveries will likely determine whether Tucson’s recent improvement in rents and occupancy becomes a sustained recovery or a temporary pause in a supply driven adjustment.
Full report here: NMMarketInsights Q22026 Tucson
