T
he US multifamily housing market is showing signs of a strong recovery, driven by robust demand outpacing new supply. In the first quarter of 2025, net absorption reached 100,600 units, the highest Q1 performance since 2000 and more than three times the pre-pandemic average. This marks the fourth consecutive quarter where tenant demand has exceeded new unit completions.

    As a result, the national multifamily vacancy rate fell to 4.8%, below its long-term average of 5.0%. The surge in demand comes amid a slowdown in new construction, with only 70,600 units delivered in Q1 2025, down from a record 450,000 in 2024.

    Average monthly rents increased 0.9% year-over-year to $2,184, and are expected to strengthen further due to reduced supply and continued healthy absorption. Investment activity also surged, with multifamily transaction volume reaching $28.8 billion in Q1 2025, a 33% year-over-year increase.

    Multifamily fundamentals continue to strengthen due to strong renter demand and a diminishing construction pipeline, according to Kelli Carhart, Head of Multifamily Capital Markets at CBRE. Analysts expect continued momentum for multifamily performance through 2025 and into 2026, despite broader economic uncertainty.

    Regional highlights include the Midwest (3.3%), Northeast (2.7%), and Pacific (0.9%) regions leading in annual rent growth. New York, Atlanta, and Phoenix posted the highest net absorption totals, while 63 out of 69 tracked markets recorded positive net absorption.