Key facts
- Midwestern markets are showing stronger rental growth than Sun Belt regions, according to Yardi Matrix and Cavan Companies reports.
- The Midwest accounted for only 13% of national build-to-rent (BTR) units under construction in early 2026, indicating a more balanced supply.
- Low-density BTR communities with detached homes and cottage-style products are identified as offering the best returns in the Midwest.
- Six of the top ten U.S. markets for multifamily rent growth between May 2025 and May 2026 were located in the Midwest.
- The 21st Century ROAD to Housing Act, which may remove provisions that have stalled BTR construction, has passed Congress.
Midwestern markets are emerging as significant growth areas for build-to-rent (BTR) and multifamily real estate, offering stronger rental growth and lower costs compared to the traditionally dominant Sun Belt. A new report from BTR developer Cavan Companies suggests that while the Sun Belt has seen its rental growth weighed down by new supply, the Midwest presents a more balanced market with more reliable returns.
The Yardi Matrix May 2026 report indicated a slight 0.1% year-over-year decline in national BTR rents, with Sun Belt markets like Austin and Phoenix experiencing the largest drops. In contrast, Midwestern cities such as Chicago, Columbus, and Indianapolis led the nation in rental growth. This trend is attributed to the Midwest's more measured construction pipelines, with only about 13% of national BTR units under construction in early 2026, significantly less than high-growth Sun Belt markets.
Beyond rental growth and supply constraints, the Midwest offers advantages such as lower land costs, diversified local economies in sectors like healthcare and manufacturing, and more stable operating costs for taxes, insurance, and labor. The Cavan Companies report specifically highlights low-density BTR communities, featuring detached homes and cottage-style products with 8-10 units per acre, as offering the best returns. These communities appeal to the growing 'renter-by-choice' demographic and benefit from lower turnover rates and potential rent premiums.
The appeal of the Midwest extends to the broader multifamily sector, with six of the top ten U.S. markets for multifamily rent growth between May 2025 and May 2026 located in the region. Experts like Ivan Barratt, founder and CEO of BAM Capital, note that Midwest markets are less oversupplied than Sun Belt counterparts and exhibit moderate, consistent growth patterns, avoiding the boom-and-bust cycles. The region's relative affordability is also expected to drive future in-migration.