College Towns Finally Built More Student Housing—Now, Some Have Too Much

In some college towns, the long-standing shortage of student housing appears to be easing, but this has led to a new issue: declining rents and vacant units. According to Yardi Matrix, a commercial real estate analytics platform, developers introduced over 31,000 dedicated off-campus bedrooms in 2026, marking a 20% increase compared to the previous year. However, many of these new properties are facing challenges in attracting tenants, with the average occupancy rate for buildings completed this year sitting at 84.1% in September, a significant drop from 95.3% for new projects in the same month last year.

This shift is notable, particularly as several markets that are now exhibiting signs of oversupply were previously viewed as critically undersupplied just five years ago. Back in 2021, a study by Berkadia and RealPage estimated a deficit of nearly 756,000 beds across the 50 universities with the most significant shortages. The return of students to campuses post-COVID-19 saw vacancy rates for conventional apartments near campuses plummet to around 3% that summer. The University of Central Florida topped the list of shortages, needing 33,000 additional beds.

Currently, however, the average rent around the University of Central Florida has decreased by 3.4% during the latest leasing season, despite 2,394 dedicated off-campus beds still being constructed. Similarly, at North Carolina State University, nearly 2,200 off-campus bedrooms were added in 2026, but occupancy rates dropped to 81.3% by September, down 17% from the previous year, with rents also declining by 3.5% during the leasing season.

This trend reflects a broader cooling in the rental market, which had seen consistent growth for 38 consecutive months. In September, the overall rent decline was just 0.4% year-over-year, marking the slowest rate of decrease in three years, according to Realtor.com. Jiayi Xu, a senior economist at Realtor.com, noted that the construction boom following the pandemic flooded the market, leading to significant rent reductions. However, as the construction of multifamily units has slowed down, the pace of rent declines has also moderated.

At Texas A&M University, the situation illustrates that the adjustments in student housing may not yet be complete. The market has gained nearly 2,000 dedicated off-campus beds since 2024, with occupancy rates dropping from 97.7% to 90.1%. An additional 5,365 beds are currently under construction, representing the largest development pipeline among major university markets tracked by Yardi.

The 10 university markets that saw the most significant increases in student housing in 2026 have another 18,500 bedrooms in the pipeline, nearly matching the 17,000 already available. Meanwhile, their average occupancy rate has dipped by 3% from the previous year to 92.8%, and rents experienced a 1.2% decrease during the leasing season.

The rapid expansion of student housing has outpaced demand, particularly in markets that previously displayed strong rental growth. Yardi's analysis revealed that the 32 university markets where rents fell by 3% or more this leasing season had previously averaged an 8.2% increase in rents just two years earlier. This surge in new construction largely occurred in areas that had experienced the highest rent growth from 2022 to 2025, resulting in what Yardi describes as “excess high-end inventory.”

While overall postsecondary enrollment saw a 4.5% increase, or approximately 817,000 students, in fall 2024, this growth masked a more complex landscape. Community colleges contributed significantly to this increase, while individual universities saw varied enrollment trends. By fall 2025, the unemployment rate for recent graduates reached 5.7%, up from 4.2% overall, raising concerns about the job market's impact on enrollment.

Moreover, new international student enrollment saw a sharp decline, dropping 7% during the 2024-25 academic year, with a 15% decrease among new graduate students. By fall 2025, this number plummeted an additional 17%. Unlike enrollment, which can fluctuate quickly, housing developments are often planned and financed based on previous demand forecasts that have since changed.

Looking to the future, the Western Interstate Commission for Higher Education projects a decline in U.S. high school graduates, which could lead to a 13% drop by 2041. This demographic shift may exacerbate the disconnect between housing supply and demand, affecting rent prices differently across various regions. A similar imbalance could also emerge in the broader housing market as millions of homes currently occupied by baby boomers and the Silent Generation become available over the next decade.