Seniors Housing & Healthcare Trends

MELBOURNE: Overall senior living occupancy surpassed 90% nationally in the third quarter, marking the 21st consecutive quarter of occupancy gains across the sector, the National Investment Center for Seniors Housing & Care said Thursday.

Nationally, overall occupancy grew 0.6 percentage points to 90.4%. In addition, occupied units increased 0.7% to 644,428, according to the third-quarter NIC MAP market fundamentals data.

Among housing types, active adult saw the highest occupancy in the third quarter, at 93.2%, followed by independent living at 91.7% and assisted living at 89.1%. Lisa McCracken, NIC’s head of research and analytics, said that assisted living “simply has further to climb” than where independent living sits. And although assisted living has trailed both independent living and active adult, it also showed the greatest growth quarter over quarter.

Sixteen of the primary markets that NIC MAP follows reached occupancy greater than 90% in the quarter, compared with 15 markets achieving that occupancy level in the second quarter. Boston (94%), San Francisco (93.3%) and Minneapolis (92.7%) are approaching record-high levels of occupancy, whereas Houston (87.3%), Atlanta (87.2%) and Miami (86.5%) reported the lowest occupancy rates in the third quarter. Some high-occupancy markets are turning to waitlists, but doing so leaves older adults waiting years for housing to become available, according to NIC MAP.

Annual rent growth dipped slightly from 4.7% in the second quarter to 4.6% in the third quarter, as did annual absorption rates, which fell from 2.6% in the second quarter to 2.4% in the third quarter.
Construction trends

New construction starts fell 1% in the third quarter, to 16,159 units, split between independent living and assisted living. Inventory growth was at near-record lows, holding steady at 0.4% year over year.

Senior living demand continued to outpace new construction. The senior living industry is developing approximately 10,000 units per year — approximately 10% of needed units, but will need to ramp up the pace of development to more than 100,000 new units annually for the next several decades to maintain occupancy rates of 90%, according to NIC MAP. NIC MAP CEO Arick Morton recently said that that amount translates into a need for more than $1 trillion in new senior living development over the next two decades.

“For several quarters, we’ve seen a widening gap between what baby boomers will need and what the industry is producing,” McCracken said. “We’re hearing anecdotally that planning activity for new development is picking up, but until we see the trend reflected in the data, there will continue to be increasing pressure — and opportunity — to meet demand.”

Most new development activity is concentrated on the coasts, according to the report, which also noted that acquisition costs are surpassing the expense of rebuilding or repairing existing properties. NIC analysts said that this trend will postpone construction at a time that it is “desperately” needed to meet increasing demand.

“As replacement costs start to drop below acquisition costs, we’re approaching a tipping point where new construction becomes a viable opportunity to meet the significant demand for senior housing,” Morton said. “But new construction alone won’t get us where we need to be. Adaptive reuse of large buildings, expansion of existing properties or other creative ideas could also be a solution.”

McCracken said that adaptive reuse of properties is more common in affordable or mixed-income developments than on the market-rate side of the industry. With affordability a growing concern, however, NIC thinks it represents a viability opportunity.

As several larger mall and vacant mall sites are being repurposed into mixed retail and residential projects, she said, a chance exists to integrate some age-restricted housing for older adults into those locations.

Expansion projects, McCracken said, are an opportunity to scale more quickly as a known entity in the market, and a much easier sales strategy than a ground-up new development. For groups with waitlists that have the land to expand, this seems to be a “winning strategy.”
Active adult rallies

Occupancy in the active adult sector rose 0.6 percentage points to 93.2% in the third quarter, the highest level since 2024. Construction in active adult has slowed alongside multifamily construction as both segments work through supply delivered in recent years, according to NIC MAP.

Fitness centers, clubhouses, pools and activity coordinators were the most common amenities in active adult communities, highlighting how wellness and social connection play into the sector’s appeal, according to NIC MAP data.

“The occupancy gain is an encouraging sign that some of the softness we saw in the active adult market in 2025 has improved in 2026,” NIC Senior Principal Caroline Clapp said in a statement. “With new units slowing after significant deliveries in 2024 and 2025, communities that align their offerings with residents’ priorities around wellness and social connection may be well positioned as the market absorbs recent supply.”

Regionally, Buffalo, NY, reported the highest active adult occupancy, at 97.7% for the quarter, followed by Los Angeles and San Diego, both of which reported 97.4%. Phoenix recorded the lowest active adult occupancy rate for the quarter, at 88.7%.