Despite another year of increased supply and continued economic uncertainty, the multifamily sector overall fared well in 2025, according to RealPage’s year-end analysis.
Approximately 500,000 new units came online this year. While a softening labor market has tempered demand recently, strong wage growth and cooling inflation have supported robust absorption. In addition, favorable demographics and the cost-prohibitive single-family market continue to support the long-term forecast for rental housing.
“Our analysis shows that the multifamily sector is behaving exactly as fundamental economics would predict,” said chief economist Carl Whitaker. “High-supply markets are experiencing continued rent contraction with deep concessions being offered to help absorb saturated lease-up inventories. Meanwhile, lower-supply regions continue to trend ahead of the national average, with limited slack in available units.”
However, looking ahead, an undersupply challenge may start to reemerge as early as late 2026, with starts falling to their lowest level since 2012 due to construction financing challenges and high interest rates, according to RealPage.
Some key trends in the year-end analysis include:
- Wage growth is being seen across much of the renter base, particularly among those in market-rate communities. As a result, affordability, measured by the rent-to-income ratio, has improved to its healthiest level in nearly a decade;
- Rent growth remains split between high-supply markets, which comprises nearly two-thirds of all units under construction, and low-supply markets. States with inventory over 3% continue to see rental rates fall back;
- While the share of concessions declined slightly year over year, the average discount at those properties increased, reaching levels that haven’t been seen since the late 2000s; and
- Occupancy rates at Class A properties are closer to Class B and C levels than at any point in the past decade. This is attributed to both recently supply impacts, a reduced spread between Class A and B rates, and the high cost of homeownership translating to fewer move-outs to single-family homes.
Looking ahead, RealPage predicts more balanced supply and demand conditions in the second half of 2026. Current projections forecast new multifamily deliveries could fall to as few as 300,000 new units, well below the National Multifamily Housing Council’s annual estimates to satisfy demand through 2035. In addition, with mortgage rates remaining above the 6% threshold, renting still remains significantly less expensive than homeownership, making it unlikely to see an exodus of renters from the market.