Lower Interest Rates Boost Multifamily Sector

Rate Cuts Lead to Lower Costs and Increased Investment

The multifamily sector saw some good news as 2025 came to a close. After maintaining restrictive policy for most of 2025, the Federal Reserve reduced rates in September, October, and, most recently, in December. (While they also signaled a potential rate cut in 2026, it does not look to be coming any time soon.)

The resulting shift to lower borrowing costs is a welcome — and needed — relief for the multifamily housing market, and we are closely watching how falling interest rates and stabilizing housing costs reshape the sector.

Already, we see investment activity in the multifamily sector showing measured signs of renewed confidence, despite prolonged macroeconomic headwinds. (For more on this, please see Fundamentals Signal a Measured Path to Recovery.) U.S. multifamily transaction volume rose 7.5% year-over-year through 3Q 2025, totaling roughly $108 billion, and the sector continues to dominate commercial real estate transactions.¹

Opportunistic Buying Environment

In addition to reducing borrowing costs and encouraging higher transaction volumes, lowering interest rates has historically supported higher valuations as well. Yet, 2025 saw a significant decline in pricing — U.S. commercial property values were 17% below 2022 peaks, with apartment values down about 19%.² Declines greater than 10% have occurred only twice in the past four decades: during the early 1990s recession and the 2008 global financial crisis.³

Historically, valuation resets like this create compelling entry points for real estate investors. Together, with strong long-term fundamentals and moderating capital costs, Post is looking for 2026 to be an opportunistic buying environment.

Post’s Outlook

2025 was a recovery year, and we expect this to continue and broaden in 2026, supported by a much smaller new construction pipeline and sustained renter demand. In uneven market conditions, disciplined execution and strong asset-level operations are essential to navigating change effectively.

Additionally, with the early effects of interest-rate reductions beginning to filter through the market, we remain focused on acquiring properties under our affordable housing conversion strategies. We believe the current pricing environment, combined with moderating supply and stable demand, presents an opportunity to acquire high-quality assets at attractive pricing levels.

¹ CBRE, 4Q2025.
² Green Street, December 2025.
³ The Wall Street Journal, December 2025.