Whether strong multifamily performance continues for the second half of 2025 depends on a number of competing factors, including whether robust apartment supply will be met by renter demand, says Yardi Matrix in a summer report.
“Questions going forward include whether robust supply will continue to be matched by strong renter demand, how quickly the delivery pipeline will slow in the face of waning starts, and whether interest-rate uncertainty will continue to keep deal flow weak in the face of strong investor demand,” the report says.
Tariffs and negotiation remain a question. However, “metrics such as job growth, inflation and consumer spending have remained steady. Interest rates have stabilized, albeit not falling as the commercial real estate industry hoped going into the year. However, there are signs that the strong growth of recent years is slowing, and uncertainty is creating heightened downside risks going forward.”
Highlights of the report
- Multifamily performance remained strong in the first half of 2025, with demand nearly keeping pace with the heavy supply pipeline. Deliveries are waning as starts decline, feeding optimism about a new wave of rent growth on the other side of the supply peak.
- The U.S. economy has held up under the weight of sharp changes in policy, but there are risks from the impact of higher tariffs, volatility in the financial markets and general uncertainty about policy. Interest rates, critical to the multifamily industry, are unlikely to drop given the tug-of-war between weaker economic growth and potentially higher inflation.
- Multifamily-advertised rent growth remains restrained, about 1% nationally, with gains in most Northeast and Midwest metros and negative growth in many high-supply Sun Belt markets. The supply-demand dynamic is likely to keep growth moderate in the second half.
- Following a record-setting year for multifamily deliveries in 2024, new supply is slowing, with starts dropping by nearly half. Over 500,000 units are still expected to come online in 2025, but the full impact of declining starts will become more apparent in 2026.
- Despite investors sitting on plenty of dry powder, transactions continue to dribble at last year’s pace, as many sellers think they can get a better deal waiting for interest rates to drop. The 10-year Treasury remains in the mid-4% range, as the Federal Reserve has a wait-and-see posture toward inflation due to uncertainty over the administration’s tariffs and economic policy.
- Delinquency is rising, though not to crisis levels, and the plethora of rescue capital is serving to restructure loans that were extended in recent years.
“While a recession is currently not the base forecast, there are heightened risks of both a slowdown and increased volatility,” the report says.
Read the full Yardi report here.
