The multifamily sector has solid results in the first half of the year, overcoming some persistent challenges along the way. However, uncertainty surrounding the potential impact of the Trump administration's policies is making it difficult for industry players to plan for the future. Despite strong liquidity in the capital markets, transaction activity remains muted as investors weigh what lies ahead.
These are the key themes to emerge from Yardi Matrix’s Summer 2025 multifamily market analysis. It noted that multifamily has been buoyed by the high costs of home-buying and the financial health of renters, with wage growth outpacing both inflation and rent.
Multifamily capital is still plentiful, and debt market activity has made a strong recovery, the report noted. However, uncertainty about future Fed policy has restricted transactions. Property sales remain stalled due to the disconnect between sellers and buyers, now in its third year.
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The problem is disagreement on pricing, it said. Risk spreads are tight with mortgage rates in the 5.5% to 6% range. While cash buyers or REITs with a low cost of capital are less affected, buyers using leverage are at a disadvantage, while sellers are reluctant to offer discounts.
However, while sales are weak, mortgage activity has risen. “All lender types are eager to deploy capital, and commercial banks are increasingly forcing a resolution to loans that have been extended in recent years.”
As of the end of May, $51 billion in CMBS and $16.4 billion in collateralized loan obligations (CLOs) had been issued, totaling $67.4 billion, a 76.4% increase year-over-year from the same period in 2024. In the same period, $23.2 billion of Fannie Mae securities and $25.8 billion of Freddie Mac securities were issued toward their 2025 allocation of $73 billion. In addition, $62 billion of Ginnie Mae securities were issued.
At the same time, 2025 saw an increase in multifamily delinquencies and restructurings. The rates were 6.4% for CMBS, 1.3% for commercial banks, 0.6% for Fannie Mae, 0.5% for Freddie Mac and life insurance companies. “Heightened economic and policy uncertainty means that decision-making will continue to be conservative while market players remain vigilant,” the report said.
Nationally, multifamily rent growth hovers around 1% and is likely to remain moderate, though absorption remains solid.
“Markets with limited new supply have recorded the largest cumulative rent growth, led by New York (13.5%), Kansas City (9.4%), Columbus (9.2%), Chicago (9.0%) and New Jersey (8.5%),” the report stated. However, some Sunbelt markets that have seen a wave of new supply have experienced cumulative rent declines since January 2023. They include Austin (-11.2%), Phoenix (-6.5%), Orlando and Atlanta (both -4.1%), and Raleigh (-3.2%).
If absorption remains strong, rents could rebound as supply diminishes. Nationwide, 555,000 apartment units were absorbed in 2024 – 3.4% of stock and “one of the highest demand numbers in recent history,” the report noted. The highest absorption was in Sunbelt markets, led by Indianapolis (8,430, 4.5% of stock), and followed by Sun Belt markets including Austin (8,689, 2.7%), Charlotte (5,680, 2.4%), Nashville (4,363, 2.2%) and Raleigh-Durham (3,938, 2.0%).
The report predicted modest rent growth nationally until the market rebalances: 1.5% in 2025, 1.1% in 2026, and 2.7% in 2027 – by which time even high-supply markets are expected to turn positive. By 2028, rent growth is expected to reach 3% to 3.5% and continue at this pace through the end of the decade.
While multifamily starts slumped 38.4% in 2024 to 437,000, construction underway continues, with 536,000 completions projected this year. That is well below the record 663,000 units completed in 2024, but still high compared to the 314,000 units delivered annually from 2013 to 2019. The nation’s multifamily stock is projected to increase by 3.1% in 2025, particularly in Sunbelt areas and the Mountain West.
However, the report finds most high-supply markets have already passed their peak in new deliveries. The exception is Miami, which is expected to peak in 2026.
“Matrix projects new supply will continue to decelerate, falling to 422,000 units in 2026 and bottoming at 350,000 units in 2027 before gradually recovering between 2028 and 2030. The decline in completions will affect all unit types. By 2027, market-rate deliveries are projected to drop 47% from their 2024 peak, affordable housing by 24%, senior housing by 17% and single-family build-to-rent communities by 43%.”
The report also observed a newer trend in the multifamily sector. It notes that a larger share of deliveries is now comprised of the single-family build-to-rent segment, projected to reach 6.9% of all new deliveries in 2026, compared to 2% in 2019, and the fully affordable housing segment, projected to reach 16.2% in 2026, compared to 11.3% in 2019. In contrast, market-rate units are expected to dip to 75.1% in 2026 from 84% in 2019.
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