With single-family (SF) construction lagging in the U.S. over the past couple of years, multi-family (MF) housing is filling in the gap.

Families and individuals need places to live, but low affordability, high interest rates, and other financial challenges make it difficult to buy. This has contributed to solid growth in MF and build-to-rent (BTR) construction, as demonstrated through a high number of permits, starts, and completions.

Although the MF housing activity is projected to moderate in the coming months, there is still an opportunity for manufacturers and suppliers within the market. The key to staying competitive, despite the uncertainty from economic and industry forces, is creating genuine value for consumers, investing in both service and technology, and investing in operational efficiency.

How is the Multi-family Housing Market Performing This Year?

In response to low SF affordability and high new home inventory, MF housing rebounded notably in 2025. Roughly 395,000 MF homes were started in 2025, and 397,000 MF homes are forecasted to start in 2026, based on data from the National Association of Home Builders (NAHB) and the Federal Reserve Bank of St. Louis (FRED), included in The Farnsworth Group’s Construction and Remodeling: Industry Drivers and Forecast Report.

Permits which can serve as a leading indicator of future construction activity, have been fairly constant. Completion rates, which represent actual new units ready for occupancy, have decreased slightly. This can affect housing stock, prices, and rental vacancy rates.

While the supply of homes on the market has been increasing, overall inventory is still low, which is keeping prices high and limiting mobility, as well as first-time home buying activity.

An Update on the MF Housing Market in 2026

Over the past year or so, MF construction has benefited from earlier shifts toward rental housing, though demand is stabilizing. SF starts are projected stabilize in 2026 and recover into 2027 as financing conditions gradually improve, while MF starts are expected to moderate through 2026, as excess supply is absorbed, then level off into 2027. Near-term growth remains mixed, with gains expected to be modest.

What are the Latest Trends in the Build-to-Rent Industry?

BTR communities encompass SF homes—which are increasingly more popular than apartments—with professional property management oversight. Prospective homeowners receive the temporary benefits of not living in an apartment and flexibility of renting while biding their time until ownership is feasible.

Based on recent data from Cavan Companies, the BTR sector saw 27% year-over-year growth in 2024 with $14.8 billion in institutional capital invested. Some of the factors contributing to BTR growth in the U.S. include a critical undersupply of housing, a deepening affordability crisis, and escalating land and materials costs.

Responding to the Homeowner's Desired Living Situation

With new construction cost and labor constraints hindering the creation of new SF housing, millions are priced out of homeownership for the time being, and the nationwide housing deficit persists. As a result, MF and BTR communities have become a necessary alternative that is liable to persist for years to come.

While millions are being forced to continue to rent, the desire NOT to be in traditional multi-family housing options, like apartments, is strong as consumers look to fulfill their lifestyle goals outside of city centers.

What Economic Trends are Affecting MF and BTR Construction in 2026?

There are several economic headwinds that are impacting the housing market as a whole. Here is a look at some of the economic and housing trends that provide insight into the state of the MF home industry and that may influence the market in the coming months:

1. U.S. Housing Inventory

For a healthy market, there should be an average of six months’ supply of housing on hand, reflecting a balance between buyer and seller markets. As of July 2026, the existing home supply remains low, or a 4.6 months’ supply, while the new homes supply was at approximately 10.3 months, according to data from the Construction and Remodeling: Industry Drivers and Forecast Report. This abnormally wide gap may influence builders to defer new SF starts until the clear out inventory, which has a residual effect on the MF housing segment.

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2. Homeownership Rates

After stabilizing in 2024, the homeownership rate edged down in 2025 to its weakest level since 2019. As of the first quarter of 2026, the rate was about 65%, based on data from the U.S. Census Bureau. High mortgage rates, tight supply, and rising home prices are limiting affordability to a multi-decade low, particularly among young Millennials and Gen Z entering the market for the first time. The past four years mark historic lows for the number of first-time buyers, driven by tight inventory and worsening affordability. While the demand exists, and individuals want to get into SF housing, there are simply several barriers.

3. Housing Affordability

One of the barriers, that goes hand-in-hand with the homeownership rate, is affordability. While overall affordability improved modestly through mid- to late 2025 as rates eased and incomes rose, conditions remain weak by historical standards and continue to limit the pool of qualified buyers.

Over the past five years, the house prices across the country are up 55%, a trend that is discussed in-depth in a recent Shop Talk with The Farnsworth Group President Grant Farnsworth and Danushka Nanayakkara, Assistant Vice President for Forecasting at the National Association of Home Builders (NAHB). In the 1970s, a typical family spent roughly three times its annual household income to purchase a home. Today, that figure is closer to five times household income.

4. High Interest Rates

High interest rates also decrease affordability and reduce affordability. About 52% of homeowners have a mortgage rate under 4%. Although this number is declining, that represents a significant portion of homeowners who are choosing to stay in their current living situation to maintain their rate, rather than accepting a less desirable one (the current 30-year fixed-rate mortgage rate is above 6.6%). Additionally, would-be buyers also may choose a rental option or other MF living situation until conditions improve and they are able to purchase their own home.

Historical evidence suggests that once rates stabilize, and particularly if they drop to 6% or lower, homeowners will be more apt to buy and the ongoing lock-in effect in the U.S. will loosen further.

5. Home-Buying Sentiment

Negative home-buying attitudes are at a 10-year high, with 73% of homeowners stating they feel it’s a bad time to buy. In particular, lower- and middle-income households are financially strained, as they are disproportionately impacted by the current economic headwinds impacting the market. Household mobility also fell to a record low of 11.8% in 2024, based on data from U.S. Census Bureau. In light of the negative home-buying sentiment, MF housing provides a viable solution (even temporary) for many individuals.

6. Trade Policy and Tariffs

Home builders, residential general contractors/remodelers, and commercial general contractors and builders all report that the U.S.’s trade policy, particularly the implementation of tariffs over the past year and a half, are affecting the construction industry. The primary negative impact is on the prices of materials, which drive up project costs. According to the Construction and Remodeling: Industry Drivers and Forecast Report, this impact has been experienced by:

• 88% of home builders
• 83% of residential GCs/remodelers
• 78% of commercial GCs/builders

The availability of materials and products is also a concern.

Responding to Current and Future Trends in the MF and BTR Sectors

When targeting the MF and BTR segments, building products manufacturers need to structure their product lines to match the preferences of the investor: on trend, low maintenance, resident health focused, and still affordable raw materials and finishing.

Similarly, building up a network of reputable and highly communicative contractors who can properly install, maintain, and repair any components will be critical for manufacturers to maintain a quality brand reputation among investors and property management companies to ensure enduring sales for years to come.

When evaluating if the total addressable market is large enough to justify expansion into alternative regions, custom market sizing research is a great first step.

Getting answers to each of the scenarios above is where our market research experts at The Farnsworth Group can help. Then, equipped with data unique to your company’s opportunities and risks, you can ensure that your company grows alongside these trends for multi-family housing and build to rent communities.

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