Though there was heated debate over how much multifamily construction starts fell in 2025, industry professionals agreed they fell precipitously from the elevated levels of 2021 and 2022, for multiple reasons.
From 2023 to 2025, PwC reported a drop of more than 40%. When the U.S. Census Bureau’s monthly reports resumed after the government shutdown last year, its data showed that the number of October starts for buildings with five or more units fell 25.9% from September and 10.8% year over year to a seasonally adjusted rate of 347,000 apartments.
And 2026 doesn’t look a lot better, according to certain sources. According to the National Association of Home Builders, apartment developers are expected to break ground on 395,000 units next year, down from 410,000 in 2025.
Despite these rather dismal numbers, multifamily developers are optimistic that the worst may be behind them.
“Really trying to hit the market needs and achieve financeable yields is where we've been focused,” said Todd Wigfield, co-head of Greystar’s Americas principal business. “I think that it will get a little bit easier to do in 2026 than it was in 2025.”
Wigfield thinks Greystar will have more starts in 2026 than it did in 2025. “But I don't think we're back to normal yet either,” he said. “I do think that 2026 will probably be the year that we thought 2025 would be.”
Here are three reasons why multifamily development might be easier this year than it was in 2025.
The capital situation improves
Count Middleburg Communities among the firms that expect to be more active in 2026. Reece Kimsey, partner and head of site acquisitions at the Vienna, Virginia-based developer, owner and manager, said the firm has 50 projects under control and expects to start almost 20 deals when its general partner investment is included.
But there’s one caveat. “That's if the capital markets catch up,” Kimsey told Multifamily Dive in December 2025. “Some of my deals that I was expecting to close this year, we're still waiting for.”
Over the past couple of years, multifamily developers have found the debt and equity markets highly constrained. “Not only were the debt markets difficult with spreads and leverage, but a lot of capital partners were still waiting to see what was going to happen,” Wigfield said. “I think that has thawed out. A lot of them are back in the game and looking.”
Specifically, things have been improving on one front. “I feel like the debt markets are in a lot better shape than they were this time last year — we're seeing a little bit more leverage,” Wigfield said. “Last year [2024], very few banks were lending. That was expensive and the spreads were higher.”
Leverage requirements have moved from the mid-50% range to more than 60%, according to Wigfield. “Banks aren't having to syndicate,” Wigfield said. “Pretty much everybody's back in the market. So that's been really nice to see.”
If you're delivering a deal one to two years from now, you're delivering in a much different environment from a fundamentals standpoint.
Collin Ross
Senior vice president of portfolio management
Ryan Davis, CEO of Dallas-based consulting firm Witten Advisors, agreed that banks are open for business, but said equity remains a concern. If rents increase in 2026, that could change.
“For equity to come back in, they just need to see positive year-over-year rent growth numbers for a period of maybe a quarter or two quarters,” Davis said.
But that’s no sure thing. Last year, rents fell for the first time since the 2010 global financial crisis, and 2025 ended with flat growth.
Costs keep falling
While Kimsey wanted to get more projects started in 2025, he’s not distraught that some didn’t cross the finish line. “The other thing that's coming in our favor is costs,” Kimsey said. “Every time we have the GMP [guaranteed maximum price contract], our costs have been going down. So why not wait?”
Part of the savings comes from subcontractors, who may now be looking for work after being booked solid for a couple of years.
“Subcontractors have come in on their margins because they got so inflated for a period of time, and now they're finally seeing their pipelines whittle down,” Davis said. “And so they're coming in a bit.”
While there have been reports of U.S. Immigration and Customs Enforcement raids emptying construction sites, Davis said those have generally affected timing more than costs. “No one showed up the next day, but then slowly over the course of the two to three weeks, they're back at the old production,” Davis said. “So maybe just more of a delay, rather than something really altering the financials of the deal.”
While there is a lot of speculation that tariffs, another Trump administration priority, would raise material prices, Wigfield, like many other developers, said they haven't really pushed up overall costs.
“What we've heard is that tariffs have not much of an impact at all,” Davis said. “Obviously, certain appliances or certain categories, absolutely. But then, on an overall basis, they have not really moved the needle.”
Davis said his clients are reporting price declines of around 3% but up to 7%, primarily due to savings on subcontractor costs. “If there are tariffs that have led to increased prices on one hand, some of this cost reduction in terms of subcontractor margins is helping out,” he said. “Costs have come down considerably.”
Dwindling supply could entice development
Delivering new apartments in many metros, especially those in the Sun Belt, hasn’t been for the faint of heart. With loads of new openings, many new projects have needed to offer multiple months of free rent to attract renters.
“Developers like ourselves suffered just as much as anybody else,” said Collin Ross, senior vice president of portfolio management at apartment developer and owner Madison Communities. “We delivered into a market where there are depressed rents.”
But once that supply is absorbed, there aren’t many projects coming online, given the slowdown in starts over the last couple of years.
“If you're delivering a deal one to two years from now, you're delivering in a much different environment from a fundamentals standpoint,” Ross said. “There’s barely anybody trying to deliver deals.”
Others see the same picture. “You look out at 2026 and 2027, there are hardly any deliveries,” Wigfield said. “There were a lot of deliveries in 2024 and 2025, and you have to get through those.”
Without any new deliveries, properties that open in two years will face little competition. But to take advantage of the future supply slowdown, developers need to move soon. “We basically have to get shovels in the ground now,” Wigfield said.
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