2023 National Multifamily Outlook: Cautious Optimism at the Outset of 2023


MINNEAPOLIS (February 21, 2023) – The national multifamily market began this year after reaching an inflection point in 2022. Deliveries of new units are ramping up at a time when economic growth is forecast to slow. These conditions create greater uncertainty in the market, but also opportunities in the new year., according to the 2023 National Multifamily Outlook released by Northmarq and authored by Research Director Pete O’Neil.

Executive Summary

  • Economic trends are mixed. Inflation remains elevated, with higher price pressures weighing on consumers and businesses. The Federal Reserve continues to raise rates to cool demand while trying to avoid a recession. Despite these challenges, the labor market has remained strong; employers continue to expand payrolls and unemployment is near generational lows.
  • Multifamily development will gain momentum in 2023, with approximately 475,000 new units slated to be delivered. This represents a nearly 20 percent increase from the level of completions recorded in 2022.
  •  As a result of elevated levels of supply growth, vacancy is on pace to increase for the second straight year. The national vacancy rate is forecast to rise approximately 50 basis points in 2023. Rents are expected to inch higher, although gains will lag levels recorded in recent years.
  • Cap rates rose in the second half of 2022 and additional increases are expected in 2023. Investment activity will likely be more modest in the first half of the year, before accelerating in the second half.
  • The capital markets are adjusting to the changing conditions. While the cost of capital will be a primary focus in 2023, there will be sufficient liquidity available for transactions.


For the first time in more than a decade, the national multifamily market begins a new year with most forecasts calling for softening operating fundamentals and a cooling investment market. While there will be some supply-demand imbalances, operating fundamentals will likely outperform many of the most dire forecasts. This year begins with a feeling of cautious optimism in the national multifamily market.

See Northmarq's full report here.