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United States Multifamily Capital Markets Report

United States Multifamily Capital Markets Report

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1Q25

Newmark presents the First Quarter 2025 United States Multifamily Capital Markets Report.

The spread between renting and homeownership in the U.S. widened to $1,210 per month—2.8 times the long-term average. This underscores the growing financial premium between renting and buying a home. The spread has remained above the long-term average of $432 for 12 consecutive quarters.
Many markets continue to show strong rent growth potential, supported by low rent-to-income ratios. Additionally, high homeownership premiums relative to multifamily rental costs position renting as the more attractive option, sustaining demand.
Over the past twelve months, demand outpaced supply by 131,151 units, even amid record-high deliveries. Absorption reached 707,811 units—more than 3.5 times the long-term average. Demand as a percentage of inventory climbed to 3.5%, the third-highest level on record. With durable demand and a projected slowdown in new supply, market fundamentals remain poised for continued positive momentum.
A total of 116,092 units were delivered in the first quarter of 2025, marking a 27.0% decline from the 3Q24 peak and a 6.8% year-over-year decrease. After 585,191 units were delivered in 2024, deliveries are expected to slow in 2025 to 431,212 units, with further deceleration projected through 2026.
Annual multifamily demand has exceeded annual new supply for two consecutive quarters. Historically, this trend persists for an average of seven quarters.
National vacancy declined to 5.0% in the first quarter of 2025, down 90 basis points from its peak one year prior and 50 basis points below the long-term average—signaling tighter market conditions.
After 18 months of muted rent growth driven by elevated new supply, rents are beginning to accelerate. Same-store rent growth rose to 0.8% year-over-year, pointing to renewed momentum.
Debt origination activity gained momentum in 1Q25, with volume exceeding 1Q23 and 1Q24 levels—driving a 32% year-over-year increase for first-quarter comparisons. Borrowers benefited from lower rates, stronger conviction in fundamentals as construction activity declined, and built-up momentum from the second half of 2024.
Investment sales volume reached $30.0 billion in the first quarter of 2025—a 35.5% year-over-year increase. Over the trailing twelve months, sales totaled $157.7 billion, reinforcing investor confidence in the multifamily sector.
Private fund vehicles targeting North American commercial real estate and launched between 2022 and 2024 have amassed $274.5 billion in assets under management, with $78.5 billion deployed. While deal volume has remained limited since the FOMC began raising rates in March 2022, many expect significant dry powder—especially from recent fund vintages—to drive increased deal activity in 2025.