While the multifamily market is poised for moderate growth driven by rising rents in 2025, the extent of growth will vary across regions. Following several years of strong demand, the sector is expected to enter the new year in solid shape, supported by a growing economy, robust consumer spending, and a favorable employment outlook, according to a sector report from Yardi Matrix.
Although the pace of rent increases has decelerated compared to the post-pandemic boom years, the forecasted growth of 1.5% signals a positive outlook for multifamily landlords and developers.
Yardi Matrix notes that multifamily performance in 2025 will be shaped by a blend of economic trends and policy shifts. The economy, which grew at a rate of 2.8% in the third quarter of 2024, is expected to continue expanding, bolstered by healthy consumer spending and moderate job growth.
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However, uncertainties remain regarding the potential impact of the incoming Trump administration. Yardi Matrix says some policy shifts—such as relaxed regulations and reduced taxes—are expected to benefit multifamily housing. But other measures, like tariff threats and large-scale deportations, could increase costs and dampen demand.
Regionally, the Northeast and Midwest are expected to lead rent growth in 2025, fueled by strong demand and limited new supply. Cities like New York, Chicago, and Washington, D.C. are forecast to see rents rise by 3.1%, 2.6%, and 2.4%, respectively. Conversely, Sun Belt markets, while still attracting jobs and population growth, face challenges due to a high volume of new multifamily deliveries. Cities like Austin, Phoenix, and Nashville will experience weaker rent growth as the oversupply of apartments continues to outpace demand.
Yardi Matrix also found that the supply side of the market is shifting, with new multifamily deliveries expected to fall in 2025 after a record 550,000 units were added in 2024. With construction activity cooling and fewer new starts on the horizon, supply pressure will ease, setting the stage for stronger rent growth in the years following 2025. However, in the short term, the delivery pipeline in Sun Belt markets will continue to weigh on rents until the excess inventory is absorbed.
The report concludes that although the challenges of 2024 will persist, the multifamily sector is positioned for moderate, steady growth in 2025, underpinned by strong fundamentals and a stabilizing supply landscape.
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