2026: The Multifamily Market Is Positioned to Regain Its Footing

An Environment Conducive for Patient and Selective Capital Deployment

2026 is unfolding as a pivotal year for the multifamily sector, as it transitions to a more balanced and investable environment. While the effects of elevated supply are still working through the system, forward-looking indicators suggest the foundation for recovery is steadily strengthening.

Supply Pressures Peak as Pipeline Contracts

The most important shift is on the supply side. Despite strong renter demand, elevated levels of new supply extended the absorption timeline beyond earlier expectations. However, this wave of deliveries appears to have neared its peak; by the end of 2025, the construction pipeline had declined meaningfully, with inventory growth nearing 2.0%.¹ While a large volume of units has already been delivered, we anticipate the path to full equilibrium will play out throughout 2026 and into 2027.

Demand Remains Durable Amid Affordability Constraints

At the same time, demand is healthy and positioned to absorb existing inventory over time. On a trailing twelve-month basis, demand remained robust at approximately 366,000 units, well above long-term averages.¹

Structural drivers — particularly the persistent gap between the cost of owning and renting —continue to favor rental housing, with this gap now nearly three times its historical norm. We believe the recent softening in occupancy and rent growth is less a sign of weakening demand and more a reflection of temporary supply pressure.

Indeed, we expect vacancy and rent growth to stabilize as supply pressures ease. A key headwind has been the increased use of concessions, which expanded meaningfully in 2025. However, improved absorption trends should support a return to positive rent growth later in 2026, reflecting a healthier and more sustainable trajectory.

The Trend for 2026: Gradual Improvement

Capital markets conditions also began to stabilize, as interest rates moved off peak levels and investors gained more clarity on the path forward. Although borrowing costs remain elevated, improving liquidity and a growing volume of loan maturities will support a gradual recovery in transaction volume, primarily through recapitalizations and selective asset sales rather than widespread distress. Rather than a rapid decline to rates, the path forward is likely to be more measured, with long-term borrowing costs stabilizing in the ~4% range.²

Post’s Outlook

Overall, 2026 is shaping up to be a year of measured recovery. Supply pressures are easing as construction slows, demand remains healthy, and capital markets are improving despite a still elevated and occasionally volatile rate environment.

Performance is increasingly market-specific, with supply-constrained regions demonstrating relative stability while higher-growth markets continue to work through elevated deliveries. That said, while investment opportunities will be more nuanced, disciplined investors can find opportunities to deploy capital at more attractive bases than were available in recent years.

Against this backdrop, our outlook is increasingly optimistic for long-term, selective investment in the multifamily sector. We remain focused on disciplined execution and asset-level performance, acquiring properties through tax-exempt and affordable housing strategies where we believe strong demand fundamentals and overall supply constraints create a compelling long-term opportunity.

¹ Newmark, 4Q25.
² BlackRock; Federal Reserve; Bloomberg.