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

The student housing shortage may finally be breaking in some college towns—only for falling rents and empty beds to expose an entirely different problem in its place.

Developers delivered more than 31,000 dedicated off-campus bedrooms in 2026 across the university markets tracked by Yardi Matrix, a commercial real estate intelligence platform—20% more than the year before.

But some of the newest properties are already struggling to find residents. Buildings delivered this year averaged just 84.1% occupancy in September, according to Yardi’s preliminary estimate, compared with 95.3% for the previous year’s new projects at the same point.

It’s a rapid reversal, as many of the markets now showing signs of softness were considered badly undersupplied five years ago.

Where college towns went from too few beds to too many

In 2021, the student housing shortfall was estimated at nearly 756,000 beds across just the 50 most undersupplied schools, according to a model from Berkadia and RealPage. As a flood of pent-up demand from the COVID-19 pandemic rushed back to campus, vacancy at conventional apartments competing for students near campus had also fallen to just 3% that summer.

The shortage was estimated to be the worst at University of Central Florida—where a shortage of 33,000 beds put it at the top of the 175 universities Berkadia and RealPage tracked.

But today, average rents around UCF have fallen 3.4% over the latest leasing season, according to Yardi, even as an additional 2,394 dedicated off-campus beds remain under construction.

Around North Carolina State University, nearly 2,200 dedicated off-campus bedrooms were delivered in 2026. By September, Yardi estimated just 81.3% of tracked beds were occupied—17% below a year earlier. Average rents, meanwhile, fell 3.5% over the leasing season.

It's an even sharper pullback than the rental market overall. Despite posting year over year for 38 straight months, the pullback is finally cooling. In September, rents declined just 0.4% compared to a year before—the slowest pace of decline in three years, according to the latest data available from Realtor.com®.

Jiayi Xu, senior economist at Realtor.com and author of the Rent Report, says that points to a balancing of the supply and demand.

"The post-pandemic construction boom flooded these markets with new supply, driving rents down significantly," she says. "However, as multifamily construction has slowed, the pace of rent decline has eased correspondingly."

But Texas A&M shows why the adjustment may not be over in the student housing space.

The market has added nearly 2,000 dedicated off-campus beds since 2024 as occupancy has fallen from 97.7% to 90.1%. An additional 5,365 beds are under construction—the largest pipeline among the major university markets Yardi breaks out in its report.

And among the 10 university markets that added the most student housing in 2026, an additional 18,500 bedrooms are already under construction—enough to nearly match the more than 17,000 bedrooms online. Meanwhile, their weighted-average occupancy fell 3% from a year earlier to 92.8%, while same-store rents fell 1.2% over the leasing season.

Why the student housing boom outran demand

It's no coincidence that the markets now recording some of the steepest rent declines were among the strongest student housing markets only a few years ago.

Yardi found that the 32 university markets where same-store rents fell at least 3% this leasing season had averaged 8.2% rent growth just two years earlier. New construction subsequently concentrated in many of the markets with the strongest rent growth from 2022 through 2025, leaving some with what Yardi describes as “excess high-end inventory.”

It was also during this period that enrollement appeared to be recovering from the pandemic.

Postsecondary enrollment grew 4.5%, or about 817,000 students, in fall 2024, according to the National Student Clearinghouse Research Center—and total enrollment moved above its pre-pandemic level for the first time.

But the headline rebound was fractured, and it obscured a pullback in some parts of the higher education market. Community colleges accounted for a significant share of the growth, while individual universities followed very different trajectories.

Then, changing attitudes and job outcomes shattered the illusion all together. By fall 2025, the unemployment rate for recent college graduates hit 5.7%—well above the 4.2% overall during the same period.

Total postsecondary enrollment grew just 1% that term, then international enrollment took a plunge.

New international enrollment fell 7% during the 2024–25 academic year, according to the Institute of International Education, including a 15% decline among new graduate students. By fall 2025, it tanked an additional 17%.

And while enrollment can suddenly drop, housing doesn't have the luxury of being so immediately responsive to a changing landscape.

Projects opening today may have been planned and financed when occupancy was exceptionally tight and rents were climbing quickly. By the time those buildings opened, the demand assumptions behind them had begun to change.

Is student housing an early warning for the broader housing market?

The demographic pressure may be only the beginning.

The Western Interstate Commission for Higher Education projects that the number of U.S. high school graduates peaked at roughly 3.9 million in 2025 and will fall about 13% by 2041, largely because of the decline in births that followed the Great Recession.

But the decline will be bumpy: Some states are expected to lose large numbers of graduates, while others will continue growing. That could deepen the mismatch between supply and demand—cooling rents in some, and raising it in others.

A similar imbalance could emerge in the housing market over the same period.

Between 2026 and 2036, an estimated 13.9 million homes currently occupied by baby boomers and the Silent Generation will be released from older owner-occupancy, according to the Realtor.com Generational Housing Succession report.

At the same time, household growth is projected to slow to 8.6 million between 2025 and 2035, followed by just 5.1 million additional households over the next decade, according to Harvard’s Joint Center for Housing Studies.

That doesn't mean the U.S. is headed for a national housing glut. Instead, it points to an increasingly fractured housing market across the country.

College towns may offer an early look at that problem.

After years when scarcity dominated the housing conversation, the next challenge may not simply be whether the U.S. has built enough homes. It may be whether those homes were built in the right places, at the right prices, for the people who will actually be there to occupy them.