The multifamily sector weathered 2025 headwinds and closed the year revealing a market in stabilization.
A relentless news cycle, the unknown impact of tariffs, and elevated supply in some markets brought challenges, but as the year came to a close, demand remained resilient thanks to new entrants of renters and the stubborn price of homeownership.
We spoke with Cameron Jones, Portfolio Manager for the US Cities Multifamily Strategy at global investment management firm Nuveen Real Estate, about the state of the market in 2025 and why she remains optimistic on the market for 2026.
Changing renter demographics brings new opportunities
One of the major headlines for the multifamily sector in 2025 is the ongoing shift in renter demographics.
“Today’s renter pool is broad and deep for a number of reasons,” says Jones. “The gap between the cost of homeownership and renting, if we look back over the past 15 or 20 years, has never been wider.”
Historically, the cost of ownership has been about 35% higher than the cost of renting. Today, the cost is 90% higher and, in some coastal markets, that spread is even wider. These numbers have pushed the age of first-time homebuyers up as well, increasing from roughly 30 in the early 1990s to age 40 today.
The result is that renters are staying in place longer, expanding the demand for rental housing. With nearly 90 years of real estate investment experience and a portfolio spanning the full continuum of housing—from student housing to build-to-rent and single-family rentals—Nuveen has invested in a variety of multifamily property types to serve these changing demographics.
“Renting is increasingly becoming a necessity due to the challenges we face in homeownership,” says Jones. “Not only the cost of the home, but also the cost of the debt, real estate taxes, and insurance that go along with it.”
Nuveen has structured their product to meet this rising demand through a variety of options, including larger unit types, build-to-rent, and single-family units.
“Aging millennials are growing into the family planning stages and need more space,” Jones says. “On the flip side, the boomer generation is interested in downsizing and removing the burden of homeownership.”
New supply to meet growing demand
2025 marked a major turning point in the supply story.
While 2024 was a record year for supply growth, the market reached the so-called supply cliff in the middle of 2025, with new deliveries beginning a planned moderation caused by the precipitous drop in construction starts dating back to 2022.
Jones described two adjacent trends she’s seeing downstream of this supply story. First, the increase in supply and the resulting decrease in rents have enabled new renters to enter the market. Second, the market has continued to absorb the new supply even as it has begun to dry up, which will inevitably shift the market toward a more balanced environment.
“We really view supply as a good thing, even though in the short term it can be a little bit painful from the landlord’s perspective,” says Jones. “We anticipate the market to continue to absorb that supply, and believe by mid- to end of 2026, there will be a shift back to a more balanced market between landlord and renter.”
While low supply bodes well for rent growth in the future, Nuveen is still engaged with developers. It just takes a special project to get off the ground given the headwinds facing new development.
“It is difficult to make development projects economically viable, but we continue to evaluate opportunities,” says Jones. “In fact, we just capitalized a development deal in Seattle.”
The Seattle site is interesting, and a unique opportunity with a top-tier developer partner. However, the company evaluated roughly 50 opportunities before landing on that project.
It’s become something of a truism: the industry is heading toward an era defined by rent growth, not new development.
“Wage growth has outpaced rent growth over the past 35 months, so our renters are in a relatively healthy position to be able to absorb the rent growth that is to come as fundamentals stabilize,” says Jones. “We view the next several years as good opportunities for rent growth.”
Ending the year on a high note and looking toward 2026
2025 was a year of patience. Expectations for stabilization were high in Q1, but the industry had to recalibrate its outlook due to an onslaught of unexpected challenges.
“We quickly realized in the spring this was likely going to be another year to navigate headwinds, and that has been the case,” says Jones.
As 2025 draws to a close, Nuveen is keeping an eye on how the market absorbs the remainder of the new supply, especially in the Sun Belt. The firm is also working closely with its research team to add to markets where they’re seeing green shoots. One bright spot has been the Fed’s rate cuts over the last few months, which have helped add liquidity to the transaction and debt markets.
“We’re focused on lining up our capital where we see the best opportunity for rent growth over the next three years,” says Jones.
As the market moves past the supply cliff and toward a more balanced environment, Nuveen is deploying capital strategically in markets showing the strongest fundamentals for rent growth. With normalized debt markets, narrowing bid-ask spreads, and a healthier renter base supported by wage growth, Jones sees 2026 as an inflection point—not just for recovery, but for sustained opportunity in multifamily investment.
“I’m looking into 2026 with an optimistic lens,” Jones says
To learn more about Nuveen Real Estate, visit their website.