High deliveries, healthy vacancy rates and rising investor activity are keeping multifamily fundamentals strong as 2025 ends. As new construction is expected to slow moving into the new year, value-add and core-plus strategies are likely to remain solid bets, especially as investors continue their activity in the sector. Midwestern and urban markets continue to hold value, and midterm elections are areas to watch as 2026 progresses.
These were some of the focal points of panelists speaking at Multi-Housing News’ 2026 Outlook webinar, hosted on Dec. 16. by Editorial Director Suzann Silverman. Going into the new year, the speakers spoke of causes for both optimism and concern.
A construction lull
Jamie Woodwell, senior vice president of commercial and multifamily policy and strategic industry engagement at the Mortgage Bankers Association, opened the webinar with an outline of current market conditions. According to data cited by Woodwell, supply and demand remain relatively balanced as the year ends, but multifamily construction is at a low unseen since the 1970s.
“At one point, we had one million multifamily units under construction in the last couple of years,” Woodwell said. “We’re now at about 400,000, so new supply is starting to slow, but should continue to come for a bit.”
This slowdown in construction has pushed the national average vacancy rate to 8.5 percent, a trend that Alex Valente, principal at Trammell Crow Co., is expecting to level off over the next few years. He noted that it has become tougher to get developments off the ground, though he remains optimistic about investment opportunities in new projects.
Valente said that he expects more deals to attract the equity needed to move toward closing. When it comes to actually starting construction, he believes that a meaningful number of starts won’t be seen for the foreseeable future.
Panelists also emphasized the role of key performance indicators heading into the new year. These include net absorption, job and rent growth, more refined points that can be used to identify where the development opportunities are.
Mike Miner, head of investment sales at Berkadia, and Tyler Griffin, president of mortgage banking at Lument, noted that Midwestern markets such as Chicago, Milwaukee and Kansas City are demonstrating strong fundamentals, particularly for rent growth and cap rates. Griffin also shared that coastal cities such as New York, the Sun Belt and California are also areas to keep an eye on. Sharon Wilson Géno, president of the National Multifamily Housing Council, also advises looking at absorption rates and confidentiality agreements as indicators of market performance going forward.
Policy predictions
With the 2026 midterm elections approaching, a number of policy proposals could influence the affordable housing sector, both positively and negatively. Woodwell said there have been concerns that proposed budget cuts at the Department of Housing and Urban Development as well as reduced rental assistance from the Federal Housing Agency threaten could renters’ ability to attain and afford apartments.
Even so, Woodwell noted that the FHA program has strengthened this year with a reduction in mortgage insurance premiums, a net positive for the sector. Additionally, the interest rate cuts at the last three Federal Open Markets Committee meetings have been another encouraging signal for investors.
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Woodwell added that the midterm elections align with what Miner considers the “second chapter” of 2026, when market fundamentals may begin to shift further. At the same time, increasing affordability remains a bipartisan issue. This week, the House of Representatives introduced the Housing for the 21st Century Act which aims to increase affordable housing development by streamlining regulations and making more capital easier to access.
“When you have agreement on a problem and you have government attention on that problem, like we do right now in this whole affordability conversation, there is real opportunity for real, long, lasting solutions,” Géno said. That gives me optimism,”
Géno also flagged emerging AI policies as another potential issue in 2026. Last week, the President signed an executive order against state laws limiting AI data collection. She said that this limitation on the technology side of multifamily may put the sector at a disadvantage for investors, as other real estate classes will not face these limitations. “We really have to watch all of (it), not just our traditional real estate things, but also these technology AI related policies as well,” she said.
The future of GSEs and longer loan terms
A potential privatization of GSEs and the future of Fannie Mae and Freddie Mac remained unclear throughout 2025. During the webinar, however, speakers expressed optimism after the FHFA announced a 2026 purchase cap of $88 billion, up from $73 billion in 2025.
“The idea of possibly privatizing is still there,” Griffin said. “The difference today is that there has been a real kind of circulation back around the mantra of ‘do no harm’ and that’s what’s most important here.”
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She added that she is confident that any initial public offering that happens in the next year will be done in a way that maintains liquidity with minimal disruptions. Woodwell echoed this sentiment explaining that the federal government is looking for input on the best way to approach this topic without disrupting the mortgage market. Some billionaire hedge fund managers have their own ideas.
Another positive sign for investment and capital in the new year is that loans are becoming longer term, Griffin pointed out. “Through 2023 until six months ago, most loan requests were coming in 5-year float, or maybe a 7-year deal,” she said. “Now we’re starting to get back to some longer-term 10-year loans, which means that we’re seeing stability, investors are seeing stability, not only with the asset performance, but with interest rates.”
“We’ve got an incredibly strong and resilient market,” Woodwell concluded. “Through thick and thin, there’s going to be need for multifamily and that helps us power through.”
The post What’s Driving Optimism and Concern for Multifamily in 2026 appeared first on Multi-Housing News.
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