Momentum in the multifamily market is trending up and is likely to continue thanks to lower debt costs and higher cap rates. Many buyers have been on the sidelines waiting out financing hurdles and softer fundamentals, and positive trends should start to loosen that backlog, said Marcus & Millichap in its third-quarter multifamily national report.

The average multifamily cap rate for trades between July 2023 and June 2024 rose to 5.8%, a 110 basis point increase from 2022's all-time low. That is the highest cap rate recording since 2014. At the same time, sale prices are stabilizing as reduced financing uncertainty is helping buyers and sellers agree to terms.

Vacancy remained flat across the country for the first half of 2024 after increasing by 90 bps last year. Primary markets have had the most stable vacancy over the past year, particularly in downtown areas. Institutional-level activity also appears to be returning, with dollar volume rising in this segment in July and August.