With apartment rent growth remaining high at the midpoint of 2022 and continued tight market availability, the multifamily sector is well positioned for the second half of 2022, according to a new report from Freddie Mac. However, there are headwinds appearing.

"In 2022 we expect every market we cover to experience gross income gains," the report said. "Florida and the Southwest markets are generally expected to outperform the nation while the smaller markets in the Midwest, along with a few large markets, are generally expected to be among the comparatively weaker performers."

One reason is the impact of inflation and increased mortgage rates meeting strong demand from Millennials. "[T]he median price of a home has increased $110,000, or more than 38%, since first quarter 2020," Freddie Mac notes. "Meanwhile, mortgage rates are up 160 bps from early 2020 and up nearly 250 bps from the low seen in the fourth quarter of 2020. The combination of extreme home price appreciation and higher interest rates has made the monthly principal and interest costs jump $842, a 67.3% increase from first quarter 2020." High prices are pushing many to remain in the rental market as they are priced out of buying.