U.S. Multifamily Q3 2025 Report: Supply Trends and Market Dynamics
Executive Summary
The U.S. multifamily housing market is navigating a pivotal phase in 2025, as supply pipelines shift and economic conditions influence development trends. According to the latest Yardi Matrix forecast, completions for 2025 are projected at 547,779 units, up 2.1% from earlier estimates, with 2026 completions forecasted at 430,061 units. Despite a 16.4% annual decline in the under-construction pipeline to 1.027 million units, current levels remain sufficient to support strong near-term completions. However, a notable slowdown is expected through 2027, with deliveries falling to 360,558 units—the lowest point in the forecast horizon.
While market-rate apartments will see the sharpest supply reductions, affordable housing and single-family rentals are relatively more stable, buoyed by recent policy changes enhancing access to Low-Income Housing Tax Credits (LIHTC). Construction timelines remain stretched, particularly for garden and mid-rise projects, with average completions exceeding two years. Looking ahead, modest economic growth, easing interest rates, and robust prospective pipelines signal long-term resilience. By 2028–2030, annual supply is expected to recover above 450,000 units. For developers, investors, and operators, this transitional phase requires strategic positioning to capture opportunities amid supply moderation and policy-driven shifts.
Introduction
The multifamily sector continues to be one of the most dynamic and closely watched real estate asset classes in the U.S., shaped by evolving supply-demand fundamentals, demographic pressures, and macroeconomic conditions. After a historic surge in completions peaking at nearly 670,000 units in 2024—a 50% increase over 2021—the sector now faces a measured cooling. The Yardi Matrix Q3 2025 report highlights the complexities of navigating a market where elevated construction activity is giving way to a contraction in new starts, extended development timelines, and shifting policy incentives.
This transitional environment reflects a broader recalibration. Developers are contending with high borrowing costs, labor shortages, and supply chain challenges, all of which are elongating project delivery. At the same time, strong demand drivers—such as affordability constraints in homeownership and population growth in key metros—continue to sustain interest in rental housing. Policymakers are stepping in with expanded LIHTC funding and financing flexibility to stimulate affordable housing supply, providing a critical counterbalance to declines in market-rate projects.
For stakeholders across the real estate value chain, understanding the near- and long-term forecast is essential for capital planning, underwriting, and portfolio strategy. The following sections dissect the current forecast, supply pipeline dynamics, construction timelines, and policy implications shaping multifamily development through 2030.
Market Analysis and Outlook
Near-Term Supply Forecast (2025–2026)
Completions for 2025 are now projected at 547,779 units, reflecting a 2.1% upward revision. This increase stems from a slightly stronger-than-anticipated under-construction pipeline at mid-year, despite the pipeline’s overall decline from its March 2024 peak. In 2026, deliveries are expected to moderate to 430,061 units. The slowdown is particularly pronounced in the market-rate segment, which is forecast to decline by 60% compared to 2024. Conversely, affordable housing deliveries will see a less severe drop of 33%, supported by fresh policy initiatives.
Single-family rental (SFR) completions, which grew nearly fourfold between 2020 and 2024, are also entering a contraction phase, with deliveries forecast to fall by more than half by 2026. Senior housing remains comparatively small in volume, but the segment continues to show steady demand.
Medium-Term Projections (2027)
The most significant dip occurs in 2027, with completions projected at just 360,558 units—a 2.9% upward revision from previous estimates but still the trough of the current forecast. This drop-off reflects fewer construction starts in late 2025, although starts in early 2025 have mirrored 2024 levels. Should momentum persist in the latter half of the year, subsequent forecasts could revise 2027 supply higher.
The slowdown will exacerbate supply-demand imbalances in high-growth metros, tightening vacancy rates and potentially supporting rent growth after years of moderation. Investors and operators should prepare for a competitive leasing environment, particularly in affordable and workforce housing.
Long-Term Outlook (2028–2030)
From 2028 onward, the market is expected to regain momentum. Completions are forecast to climb back to 410,000 units in 2028 and exceed 450,000 units by 2030. This rebound is underpinned by easing monetary policy, modest GDP growth, and the resilience of development pipelines. Lower interest rates will reduce financing burdens, encouraging new project starts and fueling long-term supply recovery.
Notably, the prospective pipeline—currently at 3.48 million units—has posted consistent monthly growth, suggesting developers remain confident about the sector’s fundamentals. This pipeline growth ensures that, despite near-term supply dips, the multifamily sector retains its long-term viability.
Pipeline Dynamics: Under-Construction, Planned, and Prospective
Construction Timelines and Delivery Challenges
Completion timelines continue to extend, particularly for garden and mid-rise properties. In Q2 2025, garden projects averaged 722 days (24.1 months) to complete, while mid-rises averaged 804 days (26.8 months). Though high-rise projects have shown improvement, averaging 811 days, they remain above historical norms. Extended delivery times underscore ongoing challenges around labor shortages, permitting, and material costs—factors developers must price into financial models and underwriting assumptions.
Policy Environment and Affordable Housing Outlook
The One Big Beautiful Bill Act has created meaningful tailwinds for affordable housing by raising LIHTC funding by 12.5% (to $14 billion) and lowering the bond financing threshold for eligibility from 50% to 25%. This expansion is expected to support continued affordable housing development even as market-rate projects contract. As affordability challenges persist across major metros, these policy changes provide critical relief, potentially reshaping the composition of new multifamily supply over the next decade.
Conclusion
The U.S. multifamily sector stands at a crossroads in 2025, with a strong short-term supply pipeline giving way to contraction in 2027 before stabilizing and rebounding by the decade’s end. Extended construction timelines, financing constraints, and policy-driven realignments are reshaping the market landscape. While market-rate projects face sharper declines, affordable housing and single-family rentals remain more resilient. Long-term fundamentals, however, remain intact, supported by demographic demand, easing monetary policy, and a robust prospective pipeline.
For stakeholders, the message is clear: now is the time to refine strategies, anticipate tighter market conditions in the medium term, and position portfolios to capitalize on long-term recovery.
At Gallagher & Mohan, we specialize in helping real estate firms navigate complex market cycles with precision. From underwriting and financial modeling to asset management and accounting solutions, our offshore teams enable you to scale quickly, optimize performance, and capture opportunities even in uncertain times.
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