As potential homebuyers remain frustrated by affordability issues, multifamily owners and operators are experiencing near record retention rates with approximately 56% of residents choosing to renew their leases, according to Ali Wolf, chief economist for Zonda during the company’s Q3 Housing Market Forecast: Midwest Outlook on July 21, 2026. While new home sales are not historically low, they are essentially flat on a national basis when comparing the second quarter of 2025 with the second quarter of 2026.
However, Wolf pointed out, new home sales are average in 53% of markets and overperforming in 14% of markets. Still, 50% of builders said price cuts and incentives are higher for them now than at this time last year.
Consumers still want to buy a home, but they’re waiting because they lack confidence in the economy and perceive the value of buying a home right now as not worth the cost, according to Zonda’s research. A big factor slowing new home sales is that even as incomes have risen, home prices have risen faster.
In contrast, not only are rental renewal rates high, but some of the largest multifamily owners report extremely low percentages of renters moving out to buy a home compared to average rates. Equity Residential reports that just 7.4% of their renters moved to become homeowners, the lowest in that company’s history. Camden reports that just 9.6% of their renters moved for that reason, an extremely low number in their history.
Among millennials, though, just 4% told Zonda that they never want to buy a home, and only 3% of the Gen Z generation said they plan to rent forever. But most renters in both of those generations are uncertain about when they will be able to buy a home. For millennials, 31% hope to buy either as soon as possible or within the next one to three years, while 27% of Gen Zers in that timeframe.
Economic Forecast
Demand for rentals is likely to remain strong as these would-be buyers wait for more confidence in the economy and labor and housing markets as well as their own personal job security and finances. They’re also waiting for more affordable entry level housing options, lower mortgage rates, to save more money and to feel reduced pressure from inflation.
Zonda’s 2027 forecast, tempered by the tensions with Iran that are impacting consumer confidence, gas prices and interest rates, estimates GDP growth of 2% in 2026, followed by 2.6% in 2027 and 2.7% in 2028. Household formations, which are estimated to have slowed to 800,000 in 2025, are predicted to be 1.327 million in 2026, followed by 1.450 million in 2027 and 1.725 million in 2028. Zonda predicts multifamily housing starts to be 380,000 in 2026, followed by 350,000 in 2027 and 430,000 in 2028.
Midwest Market Opportunities
Some metro areas in the Midwest have been among the strongest for new homes sales for at least the past two quarters, according to Reid Randall, director of advisory for Zonda. Generally, the Midwest has been more resilient in the past year than the rest of the U.S., with more growth in household formations and mostly solid job markets. Both of those factors contribute to multifamily demand.
Randall presented research on four Midwest markets:
- Chicago. The Chicago metro area has seen lower household growth in part because of migration away from downtown, along with slower birth rates and immigration policies that have reduced its international population. Household growth in the metro area is anticipated to continue to decline through 2030. However, Randall pointed out that nearby counties such as Will County and Kendall County grew while Cook County lost population. In addition, the housing market (including both multifamily and single-family homes) is undersupplied by 1.35%. Housing permits, including for multifamily development, continue to be below average, which indicates that the housing market will remain undersupplied. The 65-and-older population is anticipated to grow the most of any age group in Chicago, which is expected to generate more need for age-targeted development.
- Indianapolis. Household growth is forecast to increase by 9,000 to 10,000 households per year for the next several years in Indianapolis, in part because of its affordability compared to Chicago and growth in data centers, logistics and distribution sectors. Unemployment is low in the metro area, and job growth is anticipated to continue into 2030. The housing market (including both multifamily and single-family homes) is undersupplied by 1.73%. Building permits are expected to be above average for the next several years. Unlike Chicago, the 35- to 55-year-old population is expected to grow along with the 65 and older population.
- Minneapolis. Minneapolis has also been growing in recent years and is expected to add 9,000 to 10,000 households annually through 2030. The unemployment rate is low, and job growth of 10,000 to 20,000 jobs per year is expected through 2030. The housing market (including both multifamily and single-family homes) is oversupplied by 1.1%. However, most of the oversupply is downtown, while new development is happening outside the city. Permits for single-family homes and multifamily buildings are anticipated to be average for the metro area. Like Indianapolis, the metro area is forecast to see population growth among those 35 to 55 and those 65 and older.
- Columbus. Columbus has experienced record growth in recent years, but that is anticipated to slow somewhat over the next few years due to slowing birth rates and a decrease in immigration. The strong employment picture there is expected to continue with about 10,000 new jobs annually through 2030. The housing market is undersupplied in Columbus due to its recent growth, but the number of anticipated building permits should ease that over the next few years.