By Nina Dale
Source: CRE Daily
Post-Pandemic Multifamily Shifts
Apartment vacancies are projected to rise in 2026 as new supply outpaces demand, signaling a multifamily market reset, NAHB economists say.
According to Multi Housing News, multifamily trends are changing as the Covid-driven boom fades and vacancy rates increase. At the NAHB International Builders’ Show, experts highlighted factors such as slowing domestic migration, fewer immigrants, a softer job market, and steady new supply as drivers of increased apartment vacancies for 2026.
While multifamily sales increased 15% in 2025, boosted by supply-constrained metros, rent growth softened nationally with rents dropping 1% year-over-year. Markets like Chicago, New York, and Philadelphia remain resilient, but Sun Belt cities saw weaker rent performance amid rising inventory.
Development Pipeline and Supply
Multifamily construction has cooled since peaking in 2022, when developers started 547,000 units. Starts then fell sharply to 355,000 units in 2024. Economists expect a 16% rebound in 2025. However, they forecast a 5% decline in 2026 and another 6% drop in 2027. Activity will move closer to pre-pandemic norms.
Even as starts slowed, completions surged in 2024. Developers delivered 608,000 units, the highest level in 38 years. Earlier projects reached the finish line and boosted supply.
Developers continue to favor large buildings. Projects with 50 or more units accounted for 54% of 2024 completions. Meanwhile, regulatory barriers and tight financing limit the “missing middle” sector. Townhouses and small multifamily properties made up just 3% of new supply last year.
Market Outlook
Despite declining values—down 4% in 2025, still 8% above 2019—investor sentiment is strong, and delinquency rates, though rising, remain much lower than in the office sector. NAHB’s Multifamily Occupancy Index indicates positive expectations among apartment owners.
Demographic shifts, especially new entrants as young adults move out, could partially offset rising apartment vacancies. That recalibration comes as industry data points to a broader transition in the apartment cycle, with supply-heavy markets working through elevated inventory while long-term fundamentals remain intact. However, multifamily trends suggest a market reset as supply-and-demand realign and developers navigate tighter conditions into 2026.