Multifamily Market Expected to Cool

The multifamily rental market is expected to cool as vacancies rise this year, according to the National Association of Home Builders. 

NAHB notes that many renters have been continuing to experience affordability challenges, choosing to stay in the rental market. This has been especially true in supply-constrained metros, like Philadelphia, where multifamily rents remained strong. On the other hand, rents weakened in other, supply-rich metros. 

“The national multifamily vacancy rate ran up to a record high 7.3% in December,” says Molly Boesel, senior principal economist at Cotality. “We’re past the peak of a multifamily construction surge, but a healthy supply of new units is still hitting the market and colliding with sluggish demand, causing vacancies to continue trending up.” 

According to NAHB, multifamily property values declined 4% in 2025 from 2024 and are roughly 28% below the 2022 high.  

The multifamily market is also seeing a rise in delinquency rates, though not nearly as high as office building delinquencies. 

“Looking ahead, multifamily starts are anticipated to fall 5% in 2026 to an annual pace of 392,000 units and decline an additional 6% in 2027 to a 367,000 rate, leveling off near pre-pandemic levels,” NAHB shares.