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Multifamily demand surges in Q2 as construction slows, marking one of the strongest absorption periods in 25 years.

September 19, 2025

By Jordan B. via CRE Daily <— Click here for complete article

• Multifamily demand surged in Q2 2025, with over 116K units absorbed—one of the strongest quarters in 25 years.
• New construction has dropped sharply, with fewer than 500K units underway—the lowest since 2016.
• Rent growth slowed to 1.7% annually, while occupancy rates improved slightly as owners focus on stability over pricing.
• Gateway markets like San Francisco, Chicago, and New York are leading in rent growth due to tight supply and strong demand.

A Demand Surge Meets A Construction Slowdown

The US multifamily sector is showing remarkable resilience, as reported by GlobeSt. More than 116K units were absorbed in Q2 2025—marking one of the strongest quarters in a quarter-century. Year-to-date absorption totals 216K units, closely tracking last year’s near-record pace.

But even as demand strengthens, the development pipeline is slowing. Nationwide, fewer than 500K multifamily units are under construction—the lowest level since 2016. Cushman & Wakefield’s Q2 report highlights that net absorption has now outpaced new deliveries for two consecutive quarters.

Financing Strains And Pipeline Pullbacks

Construction starts have slowed drastically amid persistent financing difficulties. Currently, under-construction units make up just 3.8% of total inventory, less than half the peak seen in 2023. Only 11 US markets reported any pipeline growth over the past year.

Markets experiencing the sharpest pipeline drops include:

• Dallas/Fort Worth: Down 22K units
• New York and Austin: Down ~18K units each
• Phoenix, Atlanta, Houston, Washington, DC: Down over 10K units each