Lessors of Residential Buildings NAICS 531110

Feb 17, 2026 - Multifamily Developer Confidence Drops

• Multifamily developer confidence declined in the fourth quarter of 2025, according to the National Association of Home Builders’ (NAHB) latest Multifamily Market Survey. The Multifamily Production Index (MPI) fell three points in Q4 2025 to 45 compared to the fourth quarter of 2024. The Multifamily Occupancy Index (MOI) decreased by seven points to 74 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. Multifamily developers’ headwinds include elevated construction costs and local regulatory difficulties. While interest rates have eased somewhat, they need to fall further to stimulate stronger multifamily construction activity. One bright spot in the MPI was garden/low-rise apartments, which, with a Q4 2025 reading of 54, was the only component of the MPI to see an increase in developer confidence. The 2025 gains for garden and low-rise apartments are expected to continue in 2026.
• Apartment REITs are bracing for another challenging year as operating expenses continue to outpace revenue growth, pressuring net operating income despite expectations for stronger conditions later in 2026, according to Bisnow. Mid-America Apartment Communities reported a 1.4% net operating income (NOI) decline in 2025 and projects a 0.75% drop this year, while Equity Residential and AvalonBay also posted slowing growth and rising costs tied to weak job gains, elevated supply in some markets, and softer rent momentum. Multifamily REIT returns fell 7.8% over the past year, trailing the broader REIT sector. Companies expect relief from sharply lower deliveries of new apartment supply and strong renewal rates, and some, including Camden, are shifting portfolios toward the Sun Belt. Essex, which outperformed peers, expects expense growth to ease as insurance costs improve, and executives across several REITs cited better rent-to-income ratios as a supportive demand trend.

• The build-to-rent market has grown as high mortgage rates, record low first-time homebuyer share, and rising demand for suburban living push more Americans toward long-term renting, according to Bisnow. The sector now delivers tens of thousands of units annually, with a heavy concentration in the South, and appeals to aging millennials, downsizing boomers, and renters seeking single-family amenities without the financial burden of ownership. Developers are diversifying product types, from ranch homes to townhomes, while navigating local pushback and uncertainty over how the Trump administration’s proposed limits on institutional single-family purchases might affect build-to-rent. Despite recent performance challenges tied to interest rates, inflation, and pockets of oversupply, operators say long-term fundamentals remain strong, with broad investor interest, growing societal acceptance of renting, and expectations that supply pressures will ease over the next 12 to 18 months.
• Sunbelt cities are grappling with a wave of oversupply in high-end apartments, creating some of the most renter-friendly conditions in the country as developers work through a pandemic-era construction surge, The Wall Street Journal reports. Phoenix stands at the center of this trend, with 54% of rentals offering at least a month of free rent and some luxury properties dangling more than three months of concessions, plus perks like gift cards and discounted event tickets. Similar dynamics are emerging in Denver and Charlotte, where more than half of units also come with free rent offers, in stark contrast to the tight coastal markets of New York and Los Angeles. While concessions help landlords preserve headline rents, Phoenix’s prices still fell 4% in 2025, and discounts remain concentrated in new luxury buildings. Developers expect the Sunbelt’s excess supply to burn off within 12 to 18 months, tightening conditions again.