Overdue mortgage payments are hitting one type of residence especially hard: buildings with two to four units. According to the Federal Reserve Bank of St. Louis, these multifamily properties have the highest rate of late payments to large banks—outpacing single-family homes, condos, co-ops and townhouses. Yet, despite their ranking, the overall picture is less daunting than it seems. The rate of overdue payments for these multifamily homes is currently the lowest seen in over a decade.
In the first quarter of 2025, the share of large bank consumer mortgage balances that were overdue by 60 days or more stood at 1.55% for single-family homes, 0.73% for condos and co-ops, 0.56% for townhouses and 2.02% for two to four-unit multifamily buildings, according to data from the St. Louis Fed. Since 2013, late mortgage payments have been more common among these assets than any other category of residential real estate, federal researchers noted.
The persistence of delinquencies in these properties appears to be connected to the so-called "missing middle" in American housing. A 2022 study published in Housing Studies found that small and medium-sized multifamily buildings—which encompass properties with two to 49 units—account for over 20% of the nation’s housing stock. These buildings are also home to the largest share of low-income households and contain the majority of the country’s rental units.
The trend has been shifting over time. In a separate analysis, the St. Louis Fed reported that the proportion of housing represented by small and medium multifamily units has shrunk from 5.9% in 1970 to just 0.8% by 2023. The bank attributes much of the risk in these properties to unstable rental income, noting, “disruptions to the flow of rental income—whether from vacancy, nonpayment, or broad economic downturns—are likely to increase the risk of mortgage delinquency.”
Still, the current 2.02% delinquency rate for two to four-unit buildings is historically low—especially compared to the third quarter of last year, when it reached a recent high of 15.20%. According to the Federal Reserve Bank of St. Louis, the situation, for now, could be much worse.
© 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.