The multifamily sector continues to face mounting challenges, with property values, transaction volumes, and rent growth all under pressure.

Pricing Weakness:

Data from MSCI Real Assets shows multifamily property prices declined 1.5% from March to April and are down 12.1% compared to a year ago — the sharpest annual drop since the 2008 financial crisis. Pricing momentum has consistently weakened since peaking in 2022, signaling broader instability across the sector.

Sales Activity Slows:

Transaction volume in May fell 18% year-over-year to $8.2 billion, ending an 11-month run of double-digit declines. Garden-style apartment sales led the pullback, falling 30%, while mid- and high-rise assets posted a modest 3% increase. Single-property transactions were down 17%, and portfolio and entity-level deals dropped 23%. Depressed pricing and limited deal flow continue to constrict overall market activity.

Rents Stagnate:

Multifamily rents have now declined modestly for 23 straight months, according to Markerr, bucking the typical seasonal uplift seen during the summer leasing season. An influx of new deliveries has weighed heavily on rent growth, even as year-over-year comparisons have become easier.

Supply Pressures Persist:

While new project starts have slowed, the volume of units under construction remains significant. Yardi Matrix recently raised its projections, forecasting multifamily completions to rise 3.3% in 2025 and 11.5% in 2026. RealPage data indicates that permitting and construction starts may have reached a low point, but the current development pipeline will continue to pressure rents in the near term.

➝ THE BOTTOM LINE:

The multifamily market remains out of balance. Property values are sliding, rents have flattened, and persistent new supply is preventing a return to stability.