Multifamily sales volume softened during the second quarter, falling 14.4% to $35.1 billion. The performance was largely impacted by AIR Communities’ $10 billion privatization during the second quarter of 2024, according to Newmark’s second-quarter U.S. multifamily capital markets report.
Despite this dip in quarterly sales volume, first-half volume increased 5.3% and trailing 12-month volume grew 24.4% compared to the prior year, the report said. Multifamily was the largest U.S. CRE asset class in terms of trailing 12-month sales volume, accounting for 33.4% of volume. This share is below peak levels recorded in 2021, but is 550 basis points above the long-term average, which points to sustained investor interest, according to Newmark.
The Sun Belt region accounts for 48.9% of trailing 12-month sales volume, as of the second quarter of 2025, while strong fundamentals in the Midwest have increased capital allocation and driven its share to 11.5%, up 294 bps from the long-term average.
Dallas led all U.S. markets during the second half with $5.6 billion in transaction volume. That is more than twice that of the next highest market and was a 105.6% increase from the first half of 2024. Newmark noted several West Coast markets also saw strong momentum, with Seattle and Portland each posting volume gains of 75% or more year-over-year.
Meanwhile, apartment index returns are trending upward across multiple sources for the second quarter, led by a 3.9% year-over-year gain from the NCREIF Index and a 2.5% increase in Green Street’s CPPI, said the report. RCA’s CPPI, however, showed only a 0.1% increase. While the indexes moved closely from 2010 to 2018, their performance has diverged following the pandemic, said the report.
Cap rates compressed across the board compared with the first half of 2024.
“The overall market, represented by RCA’s average cap rate, saw a 38-basis point decline, while core assets represented by NCREIF experienced a more modest 9-basis point yield compression,” Newmark wrote.
As of the second quarter of 2025, NCREIF’s apartment index returned 5.13% annually, outperforming the NCREIF all property index at 4.23%. Since 2010, apartments have outperformed by an average of 44 basis points compared to the all-property index, with notable alpha achieved following the Global Financial Crisis and COVID-19 pandemic, said Newmark.
An all-time high of 794,160 units was absorbed during the second quarter, an 11.1% increase from the post-COVID peak in the first quarter of 2022. Quarterly supply declined to 108,715 units and annual supply fell to 535,805 units. Vacancy declined to 4.3%, marking a 150-basis point decrease year-over-year, with the tightest markets concentrated in the Northeast, Mid-Atlantic and Midwest, regions that have seen relatively limited new supply in recent years.
Effective rent growth held steady at 0.8% year-over-year in the second quarter of 2025, unchanged from the first quarter.
“While rent growth is expected to accelerate in the coming quarters, the second-quarter stagnation is notable as it marks the first time on record that both annual demand as a percentage of existing units and vacancies are in the top quartile, yet rent growth remained below 1.0%,” said the report.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.