NMHC 2023: National Trends to Watch for the Year Ahead

January 31, 2023

NMHC 2023: National Trends to Watch for the Year Ahead

January 31, 2023

As we dive into the new year, we’re excited to come together for NMHC 2023 to re-convene with industry colleagues and tackle the trends impacting the multifamily industry. Macro-economic trends that influenced Commercial Real Estate (CRE) in 2022 have persisted into 2023, and we’re eager to discuss how inflationary challenges and investor uncertainty will impact the multifamily landscape in the year ahead.

Despite the looming potential for a recession, our 2023 Forecast: National Apartment Research Report expects apartment fundamentals to remain strong, normalizing to pre-pandemic levels that are consistent with national historical averages. We’re mindful of headwinds as we progress through Q1 of 2023 but overall, Berkadia is bullish on the multifamily industry as a whole. With that in mind, a few key trends are top-of-mind as we head into NMHC 2023.

Construction & Housing Demand

Trends stemming from the COVID-19 pandemic continue to impact our industry and the most recent evidence of this can be seen throughout the construction industry and is highlighted in the construction pipeline reports. Apartment deliveries are forecast to swell in 2023, driven by pandemic induced shortages and increased construction and labor costs.

These obstacles forced developers to extend project deadlines, which we are seeing come to a head with approximately 565,200 units being scheduled to come online by year-end. Further, nearly 250 communities began construction before the pandemic and plan to lease-up or complete in 2023, making 2023 the highest for annual deliveries in more than 20 years.


In 2023, the national workforce is forecast to increase by 0.7%, and median household income is forecast to increase by 2.8%. This expansion will further sustain job creation, strengthening individuals’ confidence to move out on their own – thus, increasing demand for multifamily rental units.

This increase in demand parallels the expected rise in household formation. In addition, as interest rates continue to rise, we expect individuals to opt towards renting as opposed to homeownership – escalating leasing activity throughout the next year.

Occupancy & Rent

The national occupancy rate is forecast to settle at 95% in the fourth quarter of 2023, making the year-end rate higher than the pre-pandemic cycle average of 94.7% during 2010 to 2019.

Additionally, we’ll likely see moderate rent growth. Our Forecast Report projects a decrease from 6.6% in 2022, to 3.3% in 2023. Prior to the pandemic, 3.6% was the national historical average for rent growth so this percentage is still healthy in our opinion and illustrates how we are beginning to transition back to a normalized average.

Weathering Persistent Inflation and a Potential Recession

Our Forecast Report also factors in a potential recession. Despite persistent inflation and investor uncertainty, we expect the multifamily industry to remain strong and exhibit resilience – performing more favorably than other asset classes.

While the expected surge in apartment deliveries in the coming year may slightly ease the build-up of demand for multifamily rental units, the surge may also create pressure in certain submarkets. However, we generally expect occupancy rates and rent growth to remain strong and stable.

In terms of investor demand, we anticipate a pickup in the second half of 2023. As we start to see cap rates expand due to activity in debt markets, increased pricing transparency will be necessary to boost the number of investors actively participating in the multifamily sector.

As we have in years past, we’d like to use NMHC as an opportunity to give back. This NMHC Annual Meeting, our wish is to pay it forward and express the gratitude we have for our industry at large, but also our clients, partners and colleagues. We’re proud to support the Las Vegas Rescue Mission to serve those in need through food, shelter, daily needs and addiction recovery. And we invite you to join us! Every dollar counts.

NMHC provides invaluable insights on trends shaping the multifamily sector while also honing perspectives that support us in guiding investors to set priorities for the year ahead. We’re thrilled to take part in the meaningful conversations that happen at NMHC, and we’re excited and optimistic about the multifamily industry in 2023.

Catch up on the latest economic impacts and market trends through our Beyond Insights series.

Hilary Provinse, EVP, Head of Capital Markets and Production Strategy, Co-Head of Mortgage Banking and Institutional Solutions for Berkadia

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