Housing economist Jay Parsons joins EMBREY Chief Investment Officer Garrett Karam for the final quarterly call of 2025, making it clear that the multifamily housing market moving into 2026 is entering a period of normalization rather than disruption. After several years defined by elevated supply and economic uncertainty, conditions are beginning to steady: deliveries are rolling off, renter behavior is stabilizing, and operating fundamentals are finding firmer footing. The central question for the year ahead is not one of structural demand, but of confidence, and more specifically, whether households feel secure enough to move and commit to longer-term housing decisions.
Lack of affordability in the for-sale market continues to support the multifamily rental outlook, particularly in higher-quality properties. Class A and B+ communities are seeing healthier absorption, while older assets rely more heavily on concessions. At the same time, renter retention and renewals, trends that have been building for more than a decade, remain durable, reinforcing the idea that today’s renter base is prioritizing quality and stability. From a capital perspective, expectations are adjusting: near-term cap-rate spreads remain compressed, but longer-horizon investors are anticipating improved spreads later in the hold period.
Looking to 2026, the multifamily market outlook will be meaningfully influenced by consumer confidence, which is currently defined by anxiety from a soft job market. Parsons doesn’t see this paralysis lasting forever, noting that confidence from renters will return once businesses understand that economic conditions are not as bad as they may seem. EMBREY remains committed to long term market fundamentals, with Karam noting that these brief periods of uncertainty often create opportunity for patient investors. If economic conditions stabilize and consumer confidence improves, the reset underway today could give way to a faster rebound in the multifamily market than many expect.
