Multifamily Headwinds Showing Signs of Easing

Exciting 📰 from Avison Young's Q2 2025 U.S. Multifamily Report! After a period of uncertainty, the data suggests a favorable shift in the market as several headwinds begin to subside.

Here are the key takeaways:
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Demand Outpacing Supply: While multifamily deliveries are set to peak in 2025, new construction starts have declined by an average of 10.4% quarter-over-quarter for the last year. This slowdown, coupled with absorption levels on pace to surpass 2024 totals, points to a healthier supply-demand balance.

💰 Return of Rent Growth: Increased demand is translating to stronger performance. Asking rents have increased by 1.8% in the first half of 2025. Major markets like San Francisco (5.2%), Chicago (3.8%), and Manhattan (3.5%) are seeing significant rent growth over the last 12 months.

📊 Investment Activity Rebounds: Investor confidence is on the rise. Sales volume in the first half of 2025 is up 1.8% compared to the first half of 2024. Seattle and Phoenix are leading the charge, each attracting over $1 billion in investment in Q2 alone. We're also seeing a more diversified investor pool, with REITs increasing their share of purchases to the highest level since 2019.

With inventory levels drop, new development starts over the next 9-12 months should be positioned nicely in many markets, due to the lack on new construction and decreasing amount of inventory.

While challenges remain, these positive indicators suggest the multifamily market is turning a corner.