The national multifamily housing market is experiencing a delicate balancing act. According to Yardi Matrix’s latest report, the average rent fell by $3 in October to $1,748. This minor dip reflects the ongoing tension between a surging supply of new units and relatively modest demand growth. As developers churn out apartments at a brisk pace, policy changes expected under President-elect Donald Trump’s administration could reshape the landscape for years to come.
The State of Multifamily: A Glut of Supply
So far in 2024, the market has absorbed 329,000 new units, with an additional 554,000 market-rate deliveries anticipated by year-end. This robust construction activity, while meeting immediate needs, is outpacing demand. Occupancy rates fell to 94.7% in September, a 10-basis-point decline from August.
This oversupply is geographically uneven. Rent growth is strongest in the Northeast, Mid-Atlantic, and Midwest, regions that have seen fewer new deliveries. New York City leads with a 5.3% year-over-year rent growth in October, closely followed by Detroit and Kansas City. Conversely, the Southeast and Southwest, hubs of booming construction, are experiencing some of the weakest rent growth. The divergence underscores how regional supply trends shape rental performance.
Yet, the horizon hints at a shift. Deliveries are projected to slow in 2026 and 2027 as starts decline. While this slowdown could ease the pressure on rents, it risks deepening the nation’s housing affordability crisis, especially in cities already grappling with supply shortages.
The Single-Family Market Mirrors the Trend
The single-family rental sector, once a bastion of steady growth, is also feeling the pinch. October saw rents fall by $8 to $2,164, marking the sector’s weakest performance in years. Year-over-year growth dropped to 0.3%, and occupancy slid slightly to 95.1%. The slowdown in single-family rentals suggests that broader economic uncertainties may be weighing on the housing market.
Policy Shifts on the Horizon
Donald Trump’s return to the White House introduces an element of unpredictability. While specifics are still speculative, several campaign promises could ripple through the multifamily housing sector.
One major potential disruptor is Trump’s plan to increase tariffs, which could drive up inflation. Treasury yields have already reacted, with the 10-year rate rising by 20 basis points to 4.45% post-election. Higher interest rates would directly affect multifamily developers, increasing financing costs for new projects and potentially slowing construction.
More controversially, Trump’s promise of mass deportations poses a dual threat to housing. On one hand, fewer immigrants could dampen demand for rentals. However, the construction industry, already stretched thin, would lose a vital labor source. Without these workers, building new housing would become more expensive and slower, exacerbating the supply shortage.
Navigating the New Paradigm
The multifamily market’s resilience will depend on how these economic and policy shifts play out. Developers and investors are already accustomed to cyclical ups and downs, but Trump-era policies could introduce novel challenges.
Higher inflation and interest rates may reduce development activity, which could stabilize rents in the short term but hurt affordability in the long term. Meanwhile, policies impacting immigration could upend supply chains, making it harder to address the housing needs of a growing population.
While it’s too early to draw definitive conclusions, market players should prepare for a landscape shaped by competing forces: excess supply in some regions, reduced new starts, and potentially restrictive economic policies. Strategic investments in regions with balanced supply-demand dynamics, like the Midwest and Northeast, may offer steadier returns amid this uncertainty.
Looking Ahead
The multifamily market, like the broader housing sector, is at a crossroads. Policymakers, developers, and investors face a critical question: how to balance the need for stable rent growth, sufficient supply, and long-term affordability.
For now, the short-term trends—falling average rents, high supply, and regional disparities—are clear. But the policies of a second Trump administration could tip the scales, ushering in a new era for multifamily housing. Investors and industry stakeholders must remain nimble, adapting to shifting dynamics while keeping an eye on the long-term opportunities in America’s evolving housing market.
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