The semiannual risk perspective from the Office of the Comptroller of the Currency (OCC), one of the primary national banking regulators, says that banks are facing more credit risk from commercial real estate.

It pays heed to office, the asset class that most worries regulators eyeing banks that may be over extended in this category, But this year's report also spent a good deal of ink focusing on multifamily as well.

Multifamily has seen "deteriorating fundamentals" last year, according to the OCC. National vacancy rates increased from 6.5% in the last quarter of 2022 to 7.6% in 2023 Q4. The reason was, as GlobeSt.com has reported, a rapid increase in unit deliveries in the south, southeast, and mountain regions. There were other headwinds, like higher interest rates and operating expenses. That was particularly the case in markets like New York City with rent control regulations that prohibited owners from more rapidly raising rents. "Multifamily fundamentals are forecast to improve in late 2024 as population growth and fewer construction starts will help bring demand and supply into better balance," they wrote. But projections for vacancies in 2026 at 8% are higher than today.