2026 Multifamily Outlook

Multifamily Properties Well-Positioned
To Weather Economic Uncertainty

Multiple forces shaping the sector. The year ahead carries many crosscurrents that will affect short-term property performance. Over the longer run, however, there are significant tailwinds that will bolster the sector.

• High-development Sun Belt markets likely face the greatest short-term challenges, while metros with limited construction will sustain their momentum.
• Over the past three years, more than 1.4 million apartment units have been added nationally.
• This record pace of development was, nevertheless, met by an unprecedented level of rental housing demand, helping to restrain vacancy rates.
• The U.S. vacancy rate was 4.6 percent at the end of the third quarter, down 130 basis points from the early 2024 cycle peak.
• The robust pace of net absorption has begun to taper, however.

Economic uncertainty a constraint. Recent robust net absorption began to taper in the third quarter, with a variety of factors likely to drive further moderation.

• Economic uncertainty has been exceptionally high since April's tariff announcement, weighing on hiring.
• In the first four months of 2025, the U.S. created nearly 500,000 jobs, followed by only 193,000 net jobs formed from May to September.
• The key 20- to 28-year-old renter cohort faced a much less favorable employment market. This age group's unemployment rate rose to 7.4 percent in September, compared to an overall U.S. rate of 4.4 percent.
• Markets with the most development will face steeper challenges, especially as domestic migration to Southern metros has tapered from the peak levels following the pandemic.
• Vacancy rates across the Sun Belt stand nearly 200 basis points higher than the average from outside that region.
• The average effective rent has trended down over the past three years in heavily developed markets.

Longer-term outlook positive. Despite short-term headwinds, performance should improve for multifamily properties over a more extended time horizon.

• The pace of construction nationally has slowed significantly, with the number of units under construction as of late 2025 down 53 percent from the peak in 2023.
• Construction is unlikely to reignite, as elevated material and construction labor costs restrain developers.
• Homeownership cost remains prohibitively high. The monthly payment on a median-priced home runs nearly $1,200 higher than the average apartment rent.
• This barrier to homeownership will continue to favor rental housing demand, maintaining lease-renewal rates around 55 percent, above the long-term average.
• The headwinds slowing household formation are also likely to be temporary, as some demand is being deferred until economic uncertainty abates or job security improves.
• If job creation and consumer sentiment improve, high home prices and limited rental construction could lead to a relatively quick improvement in multifamily performance. It is less clear when the economy will reinvigorate.

* Estimate ** Forecast
Sources: Marcus & Millichap Research Services; Moody's Analytics; National Association of
Realtors; RealPage, Inc.; U.S. Census Bureau; U.S. Bureau of Labor Statistics