Quick Reference: Where the Two Markets Stand

Figures from the Matthews Huntsville Multifamily Market Report 2025 (February 2026), the Matthews Birmingham Q3 2025 report (November 2025), The Kirkland Company Birmingham report (December 2025) and US Census Bureau Vintage 2025 estimates. Market figures reflect the reporting periods identified and will change as new quarterly and annual data are released.

A property manager looking at Alabama sees two numbers that appear to tell a bad story. Huntsville vacancy at 17.9% at year-end 2025. Birmingham vacancy at 13.7% in Q4 2025, its highest in more than a quarter century.

Read alongside two other numbers, the picture changes.

Huntsville absorbed roughly 3,800 units in the twelve months to Q3 2025 against a historical average of 1,600. Birmingham absorbed 1,102 units against a decade average of about 590. Huntsville is absorbing at more than double its historical average, and Birmingham at roughly twice its decade average.

The data suggests elevated vacancy is being driven heavily by the pace of new supply relative to absorption, rather than by a lack of renter demand alone. And the supply side is now slowing markedly. Huntsville's multifamily permits fell 32% year over year to roughly 938 units. Birmingham has 516 units under construction, the lowest total since 2019 and about 2.0% of existing inventory.

That combination defines the operating environment as both markets work through the remaining supply: elevated vacancy, widespread concessions, competitive lease-up, and a construction pipeline contracting sharply. It is also an environment in which third-party property management can become more valuable to owners. When owners feel vacancy, operational performance rather than fee tends to drive the conversation.

This guide covers what is driving each market, what the numbers mean for day-to-day property management, and where the operational pressure actually falls.

Huntsville: Strong Demand, Heavy Supply

Huntsville's population, employment and multifamily demand indicators have supported substantial investment and new apartment construction.

Population growth is rapid, though the figures vary by source. The US Census Bureau's Vintage 2025 estimate puts Huntsville city at 233,627 residents as of July 2025. The Matthews 2026 multifamily report uses a higher market estimate of 250,648 at year-end 2025, a rise of 16.6% since the 2020 Census, and ranks the metro sixth in the nation for population growth, up 58% since 2000.

Those are different methodologies rather than a contradiction - Census estimates city limits on a fixed date, while market reports often use a broader trade area. Use the Census figure for official comparisons and the market figure only where the source is named.

Incomes are high for the rent level. Matthews puts average household income at $108,150, a demographic profile that has supported continued rental demand despite the recent increase in apartment supply. Those income levels, alongside population and employment growth of roughly 3% annually, have helped support the case for continued multifamily investment.

The employment base is concentrated but deep. Major employment anchors include Redstone Arsenal and its federal tenants - NASA's Marshall Space Flight Center, US Army Aviation and Missile Command, the Missile Defense Agency and an FBI presence - alongside Boeing, Lockheed Martin, Northrop Grumman, Blue Origin, Toyota Mazda Manufacturing, the Cummings Research Park tenant base, the University of Alabama in Huntsville and Huntsville Hospital System.

Then the supply. Deliveries ran ahead of absorption for several years. Vacancy peaked at 20.0% in early 2024 before easing to 17.9% by the end of 2025. Asking rents fell 3.0% over twelve months, with the steepest declines in Class A at -4.8%, reflecting lease-up competition among recently delivered product.

What has changed is the forward pipeline. 3,737 multifamily units received certificates of occupancy in 2025, a 28% decrease on 2024. Multifamily permits fell 32% year over year to roughly 938 units. Matthews describes the under-construction pipeline as more in line with historical averages.

Development has not stopped. The $350 million MidCity District continues, and the 11-acre Front Row project downtown carries 545 residential units. But the volume behind the current wave has dropped sharply.

The operational read. Where absorption runs at more than twice the historical average and permitting is down by roughly a third, vacancy compresses on a lag. A manager operating in Huntsville today is in a lease-up-competitive market that is moderating, not a structurally weak one.

Birmingham: Smaller Swings, Same Pattern

Birmingham's numbers are less dramatic than Huntsville's in both directions, and the pattern is similar.

• Vacancy is at a generational high. The Kirkland Company reported Birmingham vacancy at 13.7% in Q4 2025, described as the highest level in more than 25 years, compared with 8.3% nationally at that time. Matthews reported 13.0% for Q3 2025 - the two readings are consecutive quarters rather than conflicting estimates.

• Rents are soft but the base is affordable. Average asking rent sits at $1,255 per month against a US average of $1,760. Asking rents declined 0.8% year over year, and concessions have become common. After peaking near 9% year-over-year growth in 2022, rent growth has turned slightly negative.

• Demand is not the constraint. The metro absorbed 1,102 units over the twelve months to Q4 2025, roughly double its decade-long annual average of about 590. Quarterly absorption in Q3 2025 was the highest since 2021. As in Huntsville, the elevated vacancy reflects delivery volume relative to that absorption rather than absent renters.

• The development pipeline has contracted sharply. As of Q4 2025, 516 units were under construction, the lowest total since 2019 and roughly 2.0% of existing inventory, down from a peak of about 2,500 units. Projects including the 475-unit Colina Hillside, 20 Midtown Apartments, The Palmer Parkside and Cortland Vesta continue to reshape the urban core, but new starts have slowed markedly.

• Where the demand comes from. Birmingham's renter base clusters around the University of Alabama at Birmingham and the medical district, the downtown employment base, and suburban submarkets including Hoover, Vestavia Hills, outlying Jefferson County and Bessemer/Fairfield, where affordability is the draw.

What the Statewide Picture Adds

Alabama's growth is concentrated, and that concentration matters for a property manager deciding where to add units under management.

Per the Public Affairs Research Council of Alabama, Alabama's population reached 5.2 million by July 2025, adding roughly 30,000 residents over the year. The state ranked 15th nationally in population growth and 11th for domestic migration rate in 2025.

The growth follows the jobs. Between July 2023 and July 2024, the Huntsville metro added more than 13,000 residents, while Birmingham-Hoover added about 6,300. The fastest-growing counties - Madison, Baldwin, Limestone, Shelby, Tuscaloosa and St. Clair - all sit on strong employment bases.

Madison and Limestone counties are the Huntsville metro. Shelby is Birmingham's southern suburban growth corridor. A manager weighing Alabama expansion is looking at two metros that account for a large share of the state's net in-migration, both currently in the softest part of their rent cycle.

Why This Market Is Driving Property Management Growth

This is where market data becomes operational, and where the case for third-party management strengthens.

• Competition for residents intensifies. Turnover becomes more operationally significant when concessions and new supply increase competition for residents. Move-outs cluster around lease-up campaigns at competing properties, and the move-in and move-out cycle stops being a periodic task. RIOO's move-in and move-out management handles that volume and timestamps the condition record either side of every tenancy.

• Concessions have to be tracked as lease terms, not marketing. A month free, waived fees, rent credits or other move-in incentives change the effective rent, the renewal conversation and the accounting at move-out. Where concessions sit in a spreadsheet rather than against the lease, they get lost at renewal. Holding them in contracts and renewals keeps the actual economics of each tenancy retrievable.

• Speed to lease becomes the operating metric. At 13% to 18% vacancy, days-on-market separates portfolios. That depends on unit-level readiness data - what is vacant, what is being turned, what is available when - which is what unit and property management tracks.

• Retention economics shift. When rents are flat or declining and concessions are common, the economics of retaining an existing resident can become more attractive than paying the cost of turning and remarketing a unit. That puts weight on responsiveness, which is what service request and task management is for.

• And compliance workflows matter more when volume rises. Clustered move-outs test deposit return deadlines and condition records, and retention pressure raises the stakes on repair response. Alabama's Uniform Residential Landlord and Tenant Act governs both areas. For the detailed requirements, see our guides to Alabama security deposit laws and Alabama landlord repair obligations and tenant remedies.

• That combination - higher turnover volume, concession complexity, leasing speed pressure and compliance exposure - creates more reasons for owners to evaluate third-party management rather than handle the operational workload themselves. A single property management platform that holds the unit status, the lease terms, the condition record and the repair trail together is what makes that workload manageable at portfolio scale.

Common Mistakes Managers Make Reading These Markets

1. Reading high vacancy as proof of weak renter demand.
Both metros are absorbing well above their long-run averages. The vacancy reflects delivery volume relative to absorption.

2. Underwriting Huntsville on immediate rent growth.
Asking rents fell 3.0% over twelve months and Class A fell 4.8%. Permitting is contracting, but vacancy compresses on a lag.

3. Treating Huntsville and Birmingham as one Alabama market.
Huntsville's vacancy is roughly four points higher, its population growth faster, and its supply wave larger and later.

4. Ignoring the Class A versus stabilised split.
In both metros the softness concentrates in recently delivered product in lease-up. Stabilised assets have performed better.

5. Underestimating how quickly new construction has slowed.
Huntsville permits fell 32% and multifamily certificates of occupancy fell 28%. Birmingham is at 516 units under construction, the lowest since 2019.

6. Quoting a single rent or population figure for a metro.
Figures differ by provider and by whether they measure asking rent, effective rent or listed rent, and city population estimates differ between Census and market sources.

7. Underestimating concession drag on effective rent.
Where concessions are common, asking rent overstates collected rent. That gap matters for underwriting and renewal pricing.

8. Building an operations model for a tight market.
At 13% to 18% vacancy, turnover handling, speed to lease and retention economics all differ from a stabilised market.

Building a Defensible Alabama Operations Setup

Four records determine whether a portfolio performs in a softening market.

• Unit-level availability and turn status. In a high-vacancy market this is the number an owner asks about first, and unit and property management holds it.

• The concession record against each lease. What was granted, for how long, and what the effective rent actually is - held in contracts and renewals rather than in a leasing agent's memory.

• The condition record at both ends of every tenancy. Turnover volume is a major driver of deposit disputes, and Alabama's deposit rules turn on the condition comparison. Move-in and move-out management timestamps it.

• The repair response trail. Retention economics and AURLTA compliance draw on the same file. Service request and task management records what was reported and what was done.

Conclusion

The headline numbers make two of Alabama's most important multifamily markets look weak. Huntsville at 17.9% vacancy at year-end 2025 and Birmingham at 13.7% in Q4 2025, both well above a national rate in the low eights at those dates.

The underlying numbers say something different.

Huntsville absorbed roughly 3,800 units against a 1,600 historical average. Birmingham absorbed 1,102 against roughly 590. Both metros are posting absorption well above the historical averages cited in their respective market reports. They have also added substantial new inventory, and vacancy remains elevated while that supply is absorbed.

The two markets are at different points in that process. In Huntsville's most recent reported twelve months, absorption of roughly 3,800 units ran ahead of deliveries of more than 3,300 - which is why vacancy fell from its 20.0% peak. In Birmingham, deliveries of 2,307 units still ran ahead of 1,102 absorbed.

The supply wave is moderating, but both markets still have inventory to absorb. Huntsville's permits are down 32% and its multifamily certificates of occupancy down 28%. Birmingham has 516 units under construction, its lowest since 2019. Both markets are moving toward a slower-supply environment, but they are doing so from very different starting points.

For a property management business, that produces a specific operating window. Rents are soft, concessions are widespread, leasing is competitive and owners are feeling the vacancy - which is when owners are more likely to scrutinise operational performance. Speed to lease, turnover cost per unit, repair response time and renewal rate are the metrics that decide portfolios in this market.

For teams operating in Birmingham, Huntsville, Madison, Hoover, Vestavia Hills or anywhere across Alabama, the discipline is to run the operation for the market you are in rather than the one the pipeline is heading toward. Track availability at unit level. Record concessions against the lease. Timestamp condition at both ends of every tenancy. And keep the repair trail current, because in a soft market the resident you keep costs less than the one you replace.

This blog is for informational purposes only and does not constitute investment, financial or legal advice. Market figures reflect the reporting periods identified in the article and will change as new quarterly and annual data are released. Vacancy, rent and absorption figures vary by data provider and by whether they measure asking or effective rent, and city population estimates differ between the US Census Bureau and market research sources. Sources: Matthews Huntsville Multifamily Market Report 2025, Matthews Birmingham Q3 2025, The Kirkland Company Birmingham report and US Census Bureau QuickFacts, Huntsville city.

Frequently Asked Questions

Q1. What is the vacancy rate in Huntsville, Alabama?
The Matthews Huntsville Multifamily Market Report 2025, published February 2026, put vacancy at 17.9% at the end of 2025, down from a record peak of 20.0% in early 2024.

Q2. What is the vacancy rate in Birmingham?
The Kirkland Company reported 13.7% in Q4 2025, described as the highest level in more than 25 years, against a national rate of 8.3% at that time. Matthews reported 13.0% for Q3 2025.

Q3. Are rents rising or falling in these markets?
Both were negative in the most recent reports cited. Huntsville asking rents fell 3.0% over twelve months, with Class A down 4.8%. Birmingham asking rents fell 0.8% year over year, with concessions common.

Q4. Why is vacancy so high if demand is strong?
Because several years of heavy deliveries built up vacant stock faster than it could be leased. Huntsville absorbed roughly 3,800 units against a 1,600 historical average, and Birmingham 1,102 against roughly 590. Both figures are well above the averages cited, but recent deliveries and lease-up supply have kept vacancy elevated in parts of both markets.

Q5. Is new construction still coming?
Considerably less of it. Huntsville multifamily permits fell 32% year over year to roughly 938 units, and multifamily certificates of occupancy fell 28% to 3,737. Birmingham had 516 units under construction as of Q4 2025, the lowest since 2019.

Q6. What is driving Huntsville's growth?
Major employment anchors include Redstone Arsenal and its federal tenants - NASA's Marshall Space Flight Center, Army Aviation and Missile Command, the Missile Defense Agency and an FBI presence - alongside Boeing, Lockheed Martin, Northrop Grumman, Blue Origin, Toyota Mazda Manufacturing, Cummings Research Park, UAH and Huntsville Hospital System.

Q7. What is Huntsville's population?
The US Census Bureau's Vintage 2025 estimate puts Huntsville city at 233,627 as of July 2025. The Matthews 2026 market report uses a higher estimate of 250,648 at year-end 2025, reflecting a different methodology.

Q8. How fast is Alabama growing overall?
Per the Public Affairs Research Council of Alabama, the state reached 5.2 million residents by July 2025, adding roughly 30,000 over the year, ranking 15th nationally in population growth and 11th for domestic migration rate.

Q9. What does a soft market mean for property management operations?
Greater competition for residents, widespread concessions that change effective rent, longer days-on-market, and retention economics that can favour keeping a resident over replacing one. Speed to lease and repair responsiveness become decisive.

Q10. Do Alabama's landlord-tenant rules change in a soft market?
The rules do not change, but the exposure does. Clustered move-outs test deposit return deadlines and condition records, and retention pressure raises the stakes on repair response under the Alabama Uniform Residential Landlord and Tenant Act.