The results from the National Multifamily Housing Council’s (NMHC) October 2025 Quarterly Market Survey revealed continued weakness in vacancy rates and rent growth alongside improvements in the availability of debt and equity financing. Survey results, which were discussed at an October 23 webinar by Chris Bruen, NMHC’s senior director of research and chief economist, included improvement in sales transactions for the third consecutive survey.
The survey of NHMC members, which asks how the market has changed over the past three months since the previous survey, results in an index for each category. An index of 50 means conditions are unchanged, while an index below 50 means conditions are worse, and an index above 50 means conditions are better. Three of the four indexes showed improvement over the past quarter.
- Market Tightness: The index of 31 indicates higher vacancy rates and lower rent growth for the 11 of the past 13 quarters, Bruen said. However, market tightness varies significantly by metro area. Among respondents, 47% said they thought conditions were looser (with higher vacancy rates and lower rent growth), but 43% said conditions were unchanged and 9% said conditions were better.
- Equity Financing: The index of 57 indicates that conditions are better for equity financing compared to three months ago. While 60% of respondents said conditions were unchanged from three months ago, 22% said there was more equity financing available.
- Sales Volume: The index of 59 indicates higher deal flow during the past three months compared to the previous three months. This was the third consecutive survey that showed better deal flow, according to Bruen.
- Debt Financing: The index of 78 indicates that members believe it’s a better time to borrow now than it was three months ago, Bruen said. A significant number of respondents (59%) said it was a better time to borrow now, while just 3% said it was a worse time to borrow.
“These indexes track with other data points,” said Cristian deRitis, managing director and deputy chief economist, Moody's Analytics, during the webinar. “Things are loosening in terms of higher vacancy rates and slower rent growth, but they’re not loose. There are some pockets of looser demand, but the important thing is that things are moving in the right direction for improvement in the multifamily market.”
Regional Variations in Job Markets and Multifamily Performance
Nationally, labor markets are pretty solid from a layoff perspective, according to deRitis.
“We’re not strong on hiring but we’re not weak, either,” he said. “We’re not shedding jobs.”
However, some markets that experienced strong expansion, such as in the South and Texas, are seeing a little pullback in rents and demand and returning to a more balanced multifamily market, according to deRitis.
“They’re not weakening, just stabilizing,” he said.
However, some markets show some signs of weakness. For example, in D.C, deRitis explained, the combination of earlier layoffs of federal workers from DOGE cuts, along with the current federal government shutdown and potentially further layoffs, has created a pocket of risk for the multifamily sector there.
Nuances to Housing Shortage
Given the recent record level of apartment completions, both deRitis and Bruen have been researching the impact of these new units on housing shortages. Despite increasing inventory and flat rent growth, the fundamental demand indicates a shortage of two million homes, according to deRitis.
“It varies by market, but generally we need 750,000 units immediately to reach equilibrium,” he said. “But when we include the number of people who are not in the market right now because of affordability issues, who are living with their parents or their roommates, that adds demand for another 1.2 million units.”
deRitis pointed out that vacancy rates now continue to be below the long term average even though it’s been climbing a little in recent years. Some markets have a surplus of units, others have a deficit, while others are approaching equilibrium, according to deRitis.
“Apartment vacancy rates may look higher in some markets, partly because newer buildings are not stabilized yet,” Bruen said. “For example, in Austin there may be a bit of surplus but there may be pent-up demand as well.”
In many markets, developers have built high end units, but fundamental demand is at the lower end, deRitis said.
“New supply can help because as people move into high end buildings, they may be freeing up some less costly units for other tenants,” Bruen said.
One future risk deRitis pointed out is that as more completions come online, the pullback in permits could result in pushing up rents in the future because of underlying demand for apartments without new supply.
“There’s a wide range of potential scenarios for the future that can impact multifamily performance, including the expectation that there will be weaker employment growth over the next year or two,” deRitis said. “But there are also positive movements such as AI investing that may make the economy do better than predicted.”
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