A Question of Demand
Multifamily Will Be Tested In 2026
The multifamily industry will be tested in 2026 as demand is weakening due to reduced immigration and weak job growth, Yardi Matrix says in its 2026 Winter Outlook.
Meanwhile, resident retention and the slowing supply pipeline are positives for rent growth, the report says. Plus, investor and lender sentiment is favorable. Transaction activity is rebounding, but slowly.
The report predicts that multifamily performance will pick up in 2026 as the economy regains its footing and excess supply gets absorbed.
The economy remains a question mark around:
- Employment growth
- The health of consumers in the bottom half of income distribution
- Interest rates.
“Job creation and consumer confidence must improve for multifamily demand to return to robust levels. A new Federal Reserve chair will push for lower interest rates to stimulate growth, with the effect of boosting multifamily capital markets,” Yardi Matrix writes in the report.
A slow start to the year but 1.2% rent growth forecast
“Although we expect apartment demand to pick up after a slow start to the year, advertised rent growth is likely to remain modest for the third straight year,” with a forecast of 1.2% national growth.
“We expect a continuation of the regional trend that has seen moderate growth in the low-supply markets in the Northeast and Midwest, while the Sun Belt and Mountain West have strong demand and supply growth,” the report says.
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The new apartment supply question
The report says a sharp drop in new apartment startups and supply “will slow and alleviate some pressure on lease-ups in rapidly growing markets.”
Matrix is forecasting that 400,500 new apartment units will be delivered in 2026, “but not enough of a decline to push rents to robust levels.”
Some final thoughts
The economy faces competing pressures, but the data does not show signs of a combing recession.
“None of the job data points to a major downturn, but flagging job growth could lead to fewer households being formed (and less multifamily demand) as young adults stay with parents or roommates longer.
Source: Rental Housing Journal
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