Renter demand and absorption rates are among the bright spots in the multifamily sector, according to a presentation by Caitlin Sugrue Walter, senior vice president of research for the National Multifamily Housing Council (NMHC), at the National Association of Real Estate Editors (NAREE) journalism conference held in New Orleans in June.
“We’re at the tail end of a historic level of completions,” Walter said. “Not only are completions leveling off, but multifamily permits were also down during the first quarter of 2025, which means there should be a further slowdown in supply in 2026 and 2027.”
Walter pointed out the challenges builders face to get developments started, including high land costs, elevated interest rates, and increased construction costs. Rising property taxes and high property insurance premiums also cut into profitability. The portfolios of 92% of NMHC members include properties in catastrophe-exposed states such as California, Colorado, Florida, Louisiana and Texas.
“In our most recent quarterly survey of construction activity, our members mentioned that that the challenges that concern them the most are construction costs,” Walter said. “It’s not easy to develop multifamily properties right now because of the financial obstacles and NIMBYism.”
According to a recent NMHC survey, 75% of members said they face NIMBY opposition, which causes an estimated 5.6% average increase in costs and an average delay of 7.4 months.
“One NMHC member told us it took 10 years to get entitled for a project,” Walter said. “When developers have to handle carrying costs for that long, they have to charge higher rents in the end.”
When it comes to policies impacting the multifamily sector, 88% of NMHC members said they avoid building in jurisdictions that have rent control. The opinion on inclusionary zoning is split: 48% said they avoid building in jurisdictions with inclusionary zoning, while 52% said they don’t avoid areas with those policies. NMHC supports voluntary inclusionary zoning programs.
Financing Optimism
While expectations of easier access to both debt and equity were low among NMHC members for the next three months, 29% of members anticipate improved conditions for new construction in the next three to six months.
The majority of those surveyed anticipate more available financing over the next 6 to 12 months, with 66% of respondents expecting more available equity and 63% expecting more available debt.
Disconnect Between Demand and Supply
Although Walter said absorption rates are doing well, there are regional differences. Rent growth was highest in the Midwest and the Northeast, up as much as 3% in some locations during the first quarter of 2025. But the Southeast and the West did not see as much growth, with most metro areas either flat or negative.
“Some of the smaller markets had decent rent growth in those regions, but Austin had negative rent growth,” Walter said. “Part of the issue is the disconnect between migration patterns and supply in 2024. Markets such as Myrtle Beach, Ft. Myers and Austin had the biggest increase in supply, while the states with the highest in-migration of renters were Minnesota, Colorado, and Vermont.”
Demographics and Economics Generate Multifamily Optimism
NMHC’s research found that more than 100 million people (31%) of Americans live in rental homes, with 40.3 million living in multifamily buildings with five or more units. The U.S. needs to build 4.3 million more apartments over the next decade to meet demand for rental housing, Walter said.
Changing household configurations and economic pressure are two reasons for the increase in demand for apartments. In 1955, married couples with children made up 44% of all households, but in 2025, just 18% of households are comprised of a married couple with children.
In an earlier presentation at the NAREE conference, Orphe Divounguy, senior economist for Zillow, stated that renting is more affordable than buying in many housing markets. While this varies dramatically by market, on a national basis, buying a home versus renting a comparable home costs $100 more per month. The difference is greater when comparing buying a home to renting a multifamily unit.
Renters remain renters for longer than in the past, and the average age of a renter is now 42, compared to 36 in 2000, Divounguy said.
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