Multifamily capital markets ended 2025 on a strong note as investors returned and financing conditions improved. According to Newmark's Q4 2025 multifamily capital markets report, debt originations climbed 37% year-over-year, while total investment sales reached $50.9 billion—a 4.5% increase from the same quarter a year earlier.
Multifamily remained the leading U.S. commercial real estate sector by capital allocation, accounting for 30.3% of all investment sales.
Lending activity rebounded as capital markets loosened. Total multifamily debt volume over the past twelve months rose 38%, led by government-sponsored enterprises and banks, which continued to account for the majority of originations. Financial institutions posted the sharpest growth, with lending volume up 85% from 2024 levels, Newmark said.
The surge in investment comes as the multifamily market transitions from a rapid expansion cycle to a more normalized environment. Despite recent headwinds, underlying fundamentals remain solid. Moderating construction activity and steady renter demand are expected to support market stability through 2026.
Units under construction are down 47% from peak levels, and new project starts have continued to decline, signaling an easing pipeline that could strengthen operating conditions over the next several years.
Newmark noted that renting remains more cost-effective than buying, helping sustain tenant demand, even as absorption and rent growth slow. The gap between monthly rent and homeownership costs averaged $1,182 in 2025—nearly three times the long-term average of $424. This reflects persistent affordability challenges in the for-sale housing market.
While net absorption turned negative in the fourth quarter at -40,379 units after 11 straight quarters of gains, annual demand still exceeded the long-term average by more than 70%, indicating a healthy normalization rather than a downturn. Sunbelt metros such as Atlanta, Austin, Charlotte and Phoenix continued to lead absorption as population growth and job creation bolstered demand.
Rents softened slightly, with effective averages down 0.6% year-over-year—marking the second consecutive quarter of declines. Class A assets outperformed with 1.3% growth, while Class C properties posted their ninth straight quarter of year-over-year declines, widening the Class A–Class C rent gap to 4%, the largest in 14 quarters. Newmark expects rents to resume positive but below-average growth in the second half of 2026.
Looking ahead, roughly $769 billion in multifamily loans are set to mature between 2025 and 2027, presenting potential refinancing and liquidity challenges.
Delinquency rates have begun to edge higher, though loan extensions remain common, with $147 billion in balances originally maturing before Q3 2025 extended further out. Cap rates stayed largely stable throughout 2025, underscoring investor confidence in multifamily's long-term stability
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