Madison Housing Starts Rebound 12 %

Madison Housing Market: 2026 Snapshot

Volatility is giving way to a tighter, more disciplined Madison housing market heading into 2026. Region-wide, new construction is still running below the Dane County target, with only 5,477 permits issued county-wide in 2024 versus a 7,000-unit annual goal.

Average home values are about $417,296, with alternative estimates near $429,229.

Zillow reported a $405,550 median sale price in September 2025.

Forecast appreciation for 2026 runs 3 to 5 percent, while Dane County condos are expected to gain 2 to 4 percent.

Inventory remains thin at 1.3 to 1.5 months of supply, though listings have been rising.

Homes go pending in 8 to 18 days.

About 43.3 percent sold above list in September 2025.

As mortgage trends stabilize, buyer demographics are shifting toward rate sensitive move up households and capitalized repeat buyers. Nationally, NAR expects mortgage rates to average about 6.25% by the end of 2026, which could further support market activity.

Owner occupied vacancy is 0.6 percent, and rental vacancy is 4.8 percent.

Madison Multifamily Pipeline: Units Under Construction

Several large multifamily projects under construction are resetting Madison’s rental supply outlook as 2026 approaches.

A phasing timeline controls delivery dates and lease-up sequencing.

Madison’s Housing Forward Plan targets adding 15,000 homes by 2030, reinforcing the policy push behind higher-density delivery timelines.

Pipeline disruptions

New Land Enterprises plans up to 500 apartments on the former Hooper site.

Phase 1A is set for fall 2028 and includes about 250 units.

Phase 1B follows Phase 1A occupancy.

It adds adaptive-reuse commercial space and a later civic component.

Scheduling risk

State Street Campus Garage pairs 263 apartments with 400-plus parking stalls.

It targets mid-2026, with contractor coordination by Mortenson and Stevens.

Dual contractors enable simultaneous phases on site.

1. January 2026 garage delivery overlaps student-tower work.
2. Old Sauk Trails delivers 144 units in July 2026.
3. Live McKee adds 125 units at McKee-Maple Grove.

2025 Net New Homes vs. Madison’s 2030 Goal

Construction timelines may stretch into 2026 and beyond. Madison’s housing scoreboard, however, is set by annual net new homes.

Disruption: Pace Still Below the 2030 Target

In 2025, Madison recorded 2,328 net new homes—about 6 per day.

The 2030 target implies roughly 3,000 per year, or about 8 per day, leaving a shortfall near 2 daily.

Metrics That Expose the Gap

Measure	2025 result	2030 pace need
Net new homes	2,328	3,000 annually
Affordable adds	9 since 2021	3,750 by 2030

Single-family and other housing types contribute.

Yet the Housing Tracker shows progress still lagging the required curve.

Land disposition, including $1 city lot sales, supports the Holistic Plan and Housing Forward.

Implementation barriers persist, with limited permanently affordable production and high per project subsidies.

Madison Vacancy Rates in 2026: Are They Easing?

In early 2026, Madison’s vacancy picture showed tentative easing for renters, but an entrenched squeeze for buyers.

Rental Vacancy: Slight Relief

Rental vacancy rose to 4.8%, moving closer to the 5% to 7% “healthy” range.

This increase was tied to higher housing production.

Even with the bump, demand still exceeds supply.

Neighborhood disparities and seasonal fluctuations also affect openings.

Owner Vacancies: Persistent Shortage

Owner-occupied vacancy remained 0.6%, below the 1.1% national average.

Tight conditions have continued largely unchanged since 2016.

Homeowners’ purchasing power has weakened overall since 2015.

The 2025 Housing Snapshot, published February 9, 2026, reported that Madison is 53% renters.

It also noted escalating land and construction costs.

Below-area-median-income households face fewer choices.

Wisconsin rentals recorded a 4.1% vacancy rate in 2024.

High-income households retain more options.

What This Means for Madison Prices and Rents

Although housing starts have improved, Madison’s pricing power remains anchored by scarce resale inventory and persistent demand.

Price Shock Risks

Dane County’s average sale price rose 7.73% to $510,497, while Madison’s median hit $415,000.

With 0.80 months of supply and listings down to 563, sellers still capture about 99.8% of list price.

The Zillow Home Value Index sits at $409,461, up 2.3% annually.

Average list prices climbed 8.59% to $520,876, signaling continued moderate appreciation in family-friendly neighborhoods.

Even so, buyers are negotiating 1% to 2% discounts today.

Rental Strain Intensifies

Tight for-sale inventory pushes would-be buyers into rentals, especially in the $300K to $500K band.

Employment growth and campus area demand limit demand elasticity, so wage impact becomes pivotal.

As a result, rents tend to track rising home values.

Assessment

Madison housing starts rose 12 percent, signaling a construction rebound amid supply strain.

Multifamily projects under construction add near-term inventory, but delivery timing and financing risk keep the pipeline fragile.

2025 net new homes still trails the city’s 2030 housing target, leaving long-term scarcity unresolved.

Vacancy rates may edge higher as new units lease up, yet absorption remains sensitive to job growth and migration.

Prices and rents are likely to stay elevated, with volatility increasing.

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