Lessors of Residential Buildings NAICS 531110

Jun 16, 2025 - Missing-Middle Multifamily Developments Increase

• So-called “missing middle” medium-density housing, which includes duplexes, townhouses, and other smaller multifamily properties, has gained in popularity over the last several quarters, according to the National Association of Home Builders. Multifamily properties in the missing middle (2 to 4 units) have generally been out of favor since the Great Recession, but they are experiencing a resurgence. In the first quarter of 2025, there were 5,000 construction starts for housing properties with 2 to 4 units, which was flat compared to a year earlier. However, over the past four quarters, the number of missing middle residential construction units reached 23,000, marking a 53% increase over the four quarters before that period. The missing middle segment’s gains may be limited absent zoning reform that allows for increased density.
• Private equity investments account for a growing share of US apartment ownership, according to a recent report by the Private Equity Stakeholder Project. With about 2.2 million units, private equity holds about 10% of all apartment units in the US. More than 60% of units owned by private equity have been purchased since 2018. About half of the apartment units held by private equity are in five states: California, Florida, Georgia, North Carolina, and Texas. The study also showed that affordability may be an issue in metros where private equity holds a significant market share. In Tampa, Florida, more than 23% of apartments are owned by private equity, and between 2019 and 2023, the share of households that spend 30% or more of their income on housing increased nearly 21%.

• In the first quarter of 2025, there were about 19,000 single-family built-for-rent (SFBFR) housing starts in the US, which was flat compared to the same period in 2024, according to the National Association of Home Builders' analysis of US Census Bureau data. However, during the four most recent quarters, 84,000 SFBFR homes began construction, up 4% compared to how many were built in the previous four-quarter period. While the historical four-quarter moving average market share for SFBFR is about 2.7% (1992-2012), SFBFR’s current share of the overall single-family market is about 8%. Single-family built-for-rent homes provide an alternative for consumers who want more space but are challenged by a lack of affordable housing inventory and downpayment requirements in the for-sale market.
• US apartment sales increased 7% year-over-year in the first quarter of 2025, reaching $30 billion, according to MSCI Real Assets and reporting by Multifamily Dive. The rise marked the fourth consecutive quarter of increased apartment sales. Single-property sales saw the most significant growth, rising 39% over Q1 2024 to $25.7 billion. While sales of individual apartment assets have returned to pre-pandemic levels, portfolio and entity-level sales remain below historical norms. Portfolio apartment deals increased 18% in the first quarter of 2025 to $4.4 billion, while there were no entity-level deals in Q1. MSCI noted that while US trade policy news cycles have had a whipsawing effect on public equity and bond markets, the multifamily market rarely reacts to shocks in a single quarter.