Uncertainty is the name of the game for the multifamily market as it faces the possibility of deteriorating rent growth in high-supply markets, the potential consequences of mass layoffs by the federal government, and tariffs that could trigger inflation and keep short-term interest rates high.
Even if tariffs succeed in forcing foreign manufacturers to locate plants in the U.S. the benefits could be a long time coming, according to the Matrix National Multifamily Report for February.
“It takes years to build manufacturing capacity. How it plays out in the short term is unclear. If nothing else, the coming months will be consequential for multifamily,” the report stated.
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The national advertised asking rent rose $1 to $1,751 last month. Metros seeing rents rise included New York (up 5.6%), Kansas City (up 4.1%), Columbus (up 3.8%), Chicago (up 3.6%), and Detroit (up 3.5%). However, rent growth remained negative in the Sunbelt in metros like Austin, Denver, Phoenix, Atlanta, and Raleigh.
Renters by necessity saw a 0.1% rise in asking rents, while lifestyle was flat. The national occupancy rate remained unchanged at 94.5%. However, occupancy fell in many high-supply metros like Denver, Nashville, Dallas, Phoenix and Orlando. The high number of completions in these markets was one factor. “Year-over-year, more than 19,000 units were delivered, while approximately 5,500 were absorbed,” the report noted. Few markets posted gains in occupancy.
The report predicted a decline in multifamily starts and supply in coming years. That will help high-supply markets absorb apartments coming online. However, local economic growth, occupancy rates, and the amount of excess supply could affect the outcome.
As supply declines in 2025, the question arises whether demand will remain robust.
“Early indications are that demand is weakening as absorption drivers are slowing. Layoffs are increasing due to the impact of budget cuts on the federal government and related programs and industries, including technology. Immigration is slowing sharply. The Atlanta Federal Reserve’s GDP model is forecasting negative growth for Q1 2025,” the report commented.
And if demand slows, Sunbelt markets that are already finding it difficult to fill new units could be victims, it predicted.
“New lease trade-outs, which measure the difference between new leases and corresponding previous leases for the same unit, are down by 4% or more year-over-year in high supply markets that include Austin, Nashville, Phoenix, Raleigh, and sections of Atlanta and Dallas,” the report noted. Furthermore, less demand would pressure properties in the lease-up phase and extend the time to absorb excess supply.
Markets with low occupancy rates could be affected too, but those with high occupancy would have some protection. New York City, New Jersey, San Diego, Boston, Los Angeles and Chicago are among the 30 metros with occupancy rates higher than 96%.
Nationally advertised rates for single-family rentals were flat, and occupancy rates were stable in February but fell 0.7% to 94.7% over the year. Single-family rentals and deliveries were lower than in 2025. Build-to-rent (BTR) completions are likely to slip this year but remain a significant share of multifamily completions, growing from below 2% in 2019 to a predicted 6.3% of supply in 2025 and 6.8% in 2026. Leading BTR metros for deliveries include Phoenix, Dallas, Atlanta, Austin and Charlotte.
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