Two big milestones this month. Here is a quick look at what closed, what is stabilizing, and what the market is telling us right now.
Summary
- Pasadena 172 closed: The 172-unit Houston acquisition is officially closed and the team is already executing the business plan from day one.
- Houston supply advantage: New multifamily completions in Houston are projected to hit their lowest level since 2013, with rents forecast to rise 2.3% in 2026 and average monthly rents approaching $1,410.
- Hermiston 17 at 94% occupancy: The property has stabilized and investors will receive distributions at the end of Q2 2026, with a refinance or sale targeted for later this year.
- National vacancy stabilizing: The U.S. Census Bureau reported a 7.3% rental vacancy rate in Q1 2026, and Q1 deliveries dropped sharply to 31,055 units.
- Supply peak appears to be in: Yardi Matrix projects approximately 430,000 national deliveries in 2026 with further declines toward 360,000 units in 2027.
- Fed holds again: The federal funds rate remains at 3.50%-3.75% following the April 28-29 FOMC meeting, with a June hold also near-certain.
- Texas fundamentals remain strong: Texas leads the nation in population growth, adding nearly 400,000 residents in the past year, with the Dallas Fed projecting 155,000 new jobs added in 2026.
Market Update
Supply Peak Appears to Be In, Vacancy Stabilizes, and the Fed Sits Tight
The supply picture is shifting in a meaningful way. Q1 2026 saw just 31,055 new units delivered nationally, down sharply from the three-year quarterly average of 80,400. That is not a modest adjustment; it is a structural reduction in the forward supply threat. Yardi Matrix's current forecast calls for roughly 430,000 completions in 2026 and approximately 360,500 in 2027, a clear step-down from the 685,000-unit peak in 2024. Most forecasters expect absorption to overtake deliveries in oversupplied markets by the second half of 2026, setting the stage for vacancy compression and firmer rent growth entering 2027. This is great for us.
The U.S. Census Bureau reported a national rental vacancy rate of 7.3% in Q1 2026, statistically flat with Q1 2025 (7.1%) and Q4 2025 (7.2%). After hitting a new record in February, the vacancy rate is now decreasing for the first time in over four years. Workforce housing continues to hold up better than Class A through this cycle, and that dynamic favors the type of assets we own and target.
The federal funds rate remains at 3.50% to 3.75%, unchanged across three consecutive FOMC meetings in January, March, and April 2026. Market-implied probability of no change at the June meeting has reached 99.6%, with steady inflation readings and a resilient labor market anchoring expectations. For real estate borrowers, the message is consistent: financing costs are not moving materially lower in the near term, which keeps the focus squarely on asset-level execution and NOI growth.
Investor Opportunities
The Search Continues
Having closed the Pasadena-172 deal, the team is now restarting efforts to search for, screen, underwrite, and submit offers on the next project. Stay tuned for updates as 10-20 new potential deals cross our desks every week.
Investor Insights
What Day-One Execution Actually Looks Like on a New Acquisition
Closing a deal is the starting line, not the finish line. The first 30-90 days after acquisition are when the gap between operators widens. This is when deferred maintenance gets addressed, management inefficiencies surface, and early capital improvements signal to residents that ownership has changed. Done well, these actions compress vacancy, reduce turnover, and begin building the NOI trajectory that will ultimately determine the property's exit value.
At Pasadena 172, the team was on the ground before the ink was dry: painting, landscaping, repairs, and camera installs underway from day one. That pace matters. Every week of deferred action is a week of suboptimal rents, preventable vacancy, and compounding deferred cost. Early execution also shapes resident retention. When people see visible improvement, they renew. Operators who move fast after close tend to reach stabilization faster and with stronger rent rolls.
Deal Activity
Pasadena 172: Closed and Executing
Pasadena 172 is officially closed. The 172-unit Houston community is now under our management, and the business plan is live. The team made its first post-close site visit last week and came back with work already underway: painting, landscaping, repairs, camera installations, and more.
The immediate priorities are tightening operations and reducing expenses to grow NOI, launching strategic unit renovations to elevate the resident experience, and improving curb appeal and community standards from the outside in. This is the part of the cycle we are built for.
Houston multifamily rents are trending upward in 2026 as new construction supply reaches its lowest level in more than a decade, with rents forecast to increase 2.3% and average monthly rents approaching $1,410. We are entering this asset at the right point in the Houston cycle.
Hermiston 17: First Distributions on the Way
Hermiston 17 has reached 94% occupancy and is performing ahead of the stabilization timeline we outlined at acquisition. Investor distributions are scheduled after Q2 2026! This is a meaningful milestone for the property and for the investors who participated in the deal.
The team is now focused on positioning the asset for a refinance or sale later this year by increasing rents even further and taking advantage of higher market averages. For example, our previous 2-bed maximum rent was $1250, but we have since rented out two 2-bed units for $1350 with the possibility of more to come this summer. We will share more on timing and next steps over the coming months.
Looking Forward
Hermiston 17 distributions go out at the end of this Quarter, and Pasadena 172's execution is just getting started. If you want to stay close to the progress on either deal, following us on social media is the fastest way to see updates as they happen. As always, feel free to reach out directly with any questions or to find out more about being involved in future deals.
All the best,
The EagleCap Team