Fundamentals Signal a Measured Path to Recovery

2025 Multifamily Market Recap

Heading into 2025, the multifamily market was expected to normalize, but as we enter 2026, the U.S. multifamily sector remains defined by oversupply and muted rental growth. While 2025 did see measurable progress — evidenced by strengthening absorption, stabilizing occupancy, and a slowing construction pipeline — the pace fell short of expectations, with elevated supply and persistent pressures weighing on fundamentals.

Still, underlying long-term fundamentals remain encouraging. Rental demand remains strong, construction pipelines are thinning materially, and commercial real estate valuations — particularly multifamily — appear to have reset to attractive levels.

Fundamentals Continue to Normalize

• Demand — Elevated new supply prolonged absorption beyond expectations, and renter demand, despite initial strength, has begun to moderate heading into 2026. Even so, underlying demand remains strong: the cost gap between homeownership and renting stands at $1,241, well above the long-term average of $457.¹ This affordability gap continues to serve as one of the sector’s most reliable demand drivers, particularly for affordable housing.
• Supply — While the glut of supply still lingers, the construction wave appears to have peaked, with markets spending much of 2025 absorbing new completions, signaling a meaningful slowdown. When final numbers are tallied, we expect the fourth quarter of 2025 to mark the first period since late 2021 in which renter demand outpaced new supply.²
• Occupancy and Vacancy — With national rental growth softening slightly to -0.1% at year-end 2025,² clearly the backlog of excess inventory is taking longer than expected to absorb, which is essential before rent growth can resume. The overall pace of vacancy rates, however, is trending lower, and we anticipate it will eventually ease from the current 8.2% to 7.9% by mid-2026.²

Post’s Outlook

Against this backdrop, Post believes 2026 will again be a year of recovery in the multifamily sector, with the most important structural shift occurring in the development pipeline. We expect new deliveries to fall sharply, reinforced by a sharp pullback in annual starts. Combined with resilient demand, this easing construction environment supports a compelling buying opportunity, particularly within the regional markets where Post is most active:

• The South accounts for 52.5% of total multifamily demand, followed by the West at 22.6%.¹
• The Southeast, led by Atlanta — the strongest performer among the top 50 U.S. metro areas — is showing signs of stabilization, as rent declines moderate and year-over-year rent growth improves.³
• San Jose recorded the second-highest rent growth nationally, surpassed only by San Francisco.³

¹ Newmark, 3Q25.
² CoStar, November 2025.
³ Jay Parsons, December 2025.