According to the latest Yardi Matrix report, the multifamily housing market in the second quarter of 2025 has demonstrated both its strengths and weaknesses. Despite facing challenges, the market has remained surprisingly resilient, showcasing a mix of stability and vulnerability.
Since peaking in 2022, the number of new multifamily housing starts has dropped significantly. However, a large pipeline of ongoing construction projects will still see around 536,000 new units delivered by the end of the year. This trend has led to ongoing debates about supply and demand dynamics in the coming years. The Yardi Matrix Multifamily Supply Forecast – Q2 2025 report predicts that by 2026, the number of new multifamily units started will fall even further, to an estimated 422,000 units.
In many markets, both investors and renters can feel the impact of the slowdown in construction. For instance, in New York, John and Sarah, a young family, were excited to move into a newly constructed apartment. However, like many others, they have experienced delays as construction timelines have pushed back, reflecting the growing uncertainty in the market. Their story is far from unique—many families across the country are facing similar challenges, where anticipated delivery dates for new apartments are constantly being pushed forward.
While new construction has slowed, existing projects are still progressing, ensuring that supply will remain steady for the foreseeable future. The Yardi Matrix report highlights that, despite the slowdown in new supply, forecasted completions from 2025 to 2027 have been increased by around 2% from previous expectations. This offers some reassurance to prospective homebuyers and renters, especially in large cities where demand for multifamily housing continues to rise.
However, economic uncertainty still looms large over the market, particularly due to factors like tariffs and global trade tensions. With the U.S. economy experiencing slower growth, this uncertainty could reduce the demand for multifamily housing, potentially delaying the recovery in rent growth. Comparing recent trends, data from April 2025 shows that while average rents in the U.S. rose by $5, reaching $1,736, the year-over-year growth rate had fallen to less than 1%.
In major urban centers, the pace of rent increases hasn’t been as fast as anticipated. For example, Katie, a renter in Los Angeles, recently moved into a new apartment but found that the rent hike was significantly higher than she expected. As a result, she is now reconsidering her long-term rental plans. Her experience is one shared by many, as rising rent prices and market fluctuations have put additional pressure on tenants, making their housing decisions even more difficult.
On the flip side, the national vacancy rate remains relatively high, with a reported 94.4% occupancy rate in March 2025—the lowest since November 2013. Despite rising rents and a reduced number of new units being built, vacancy rates in many large cities haven’t shifted significantly. This indicates that competition in the rental market remains fierce, especially in areas where population growth is strong, and the pressure between supply and demand persists.
For some investors, this environment presents both opportunities and challenges. James, a real estate investor based in New York who has invested in multiple multifamily properties, explains, “While the short-term outlook for the market is uncertain, over the long term, urbanization and population growth will continue to drive demand for housing.” His perspective gives confidence to those with a long-term investment mindset, suggesting that even in uncertain times, the fundamentals of the housing market still hold strong.
Overall, the multifamily housing market in Q2 2025 has shown a remarkable ability to remain stable despite various challenges. While new construction starts have significantly decreased, the ongoing pipeline of projects ensures that supply will continue, and vacancy rates remain low. The market’s resilience, despite economic uncertainties, signals that the multifamily sector will continue to play a vital role in the housing landscape for years to come.
In conclusion, while the number of multifamily housing starts has sharply declined, the existing supply pipeline is still strong, with many projects set to deliver in the coming years. However, the market faces uncertainty due to economic factors such as tariffs and slowing economic growth, which could impact future demand. For both consumers and investors, staying informed and adaptable will be key to successfully navigating the evolving real estate market in the years ahead.