Multifamily REITs Show Mixed Outlook as Q4 Begins

While many REITs saw steady leasing activity in Q3 2025, late-quarter softening and regional differences painted a mixed picture, with Northern California and Sun Belt markets leading.
Elevated new supply in key markets like Austin, Dallas, and Phoenix continued to drag on rent growth and lease rates, despite high occupancy and retention.
Half of the six largest multifamily REITs lowered full-year guidance due to supply headwinds and muted pricing, while the other half raised forecasts, citing regional strength and cost controls.

Key Takeaways

Demand Holding Firm – With Some Cracks

RealPage reports that multifamily REITs reported steady apartment demand in Q3 2025, with several noting stronger-than-usual early leasing activity that tapered after Labor Day. Equity Residential and UDR both highlighted this “pull-forward” in demand, which led to a quieter back half of the quarter.

Northern California stood out, with Essex Property Trust pointing to strong AI-sector demand and low new supply. In contrast, Seattle struggled with “temporary supply pockets,” and Washington D.C. faced pressure from government employment volatility. Los Angeles and the Mid-Atlantic also saw softer performance, largely due to weaker job growth.

Sun Belt-focused REITs Camden Property Trust and MAA reported robust absorption, with Camden calling 2025 “one of the best years for apartment absorption in the last 25 years.” High retention further supported occupancy across portfolios, with Equity Residential posting record-high Q3 retention rates.

Rent Growth Lags Despite Demand

Pricing trends remained under pressure across most REIT portfolios. Elevated supply in Sun Belt cities like Dallas, Austin, and Phoenix led to heightened concessions and limited pricing power. Coastal markets fared better, but rent growth was muted compared to previous years. These trends are consistent with how economic uncertainty continues to weigh on multifamily REIT rent growth across several key markets.

Despite weaker revenue, expense management became a lever for REITs to maintain profitability. Several firms cited better-than-expected savings in property taxes and insurance, although operating costs – especially for repairs, maintenance, and utilities – continued to rise.

Looking Ahead: Diverging Guidance

Heading into Q4, REITs remain split on performance expectations. AvalonBay, Equity Residential, and MAA revised their full-year guidance downward, citing softening demand, rising expenses, and competitive supply markets.

Conversely, Essex, Camden, and UDR raised guidance, bolstered by strong Q3 results and favorable market positioning. Essex pointed to its strategic advantage in low-supply, tech-driven regions. UDR credited resident resilience and operational efficiency, while Camden cited supply moderation and strong retention.

Why It Matters

The divergence in Q4 outlooks underscores the importance of market selection and operational execution in today’s multifamily landscape. While demand fundamentals remain sound, pricing power is increasingly influenced by local supply dynamics and job growth trends. As developers and investors look to 2026, the performance of multifamily REITs in Q4 will offer key insights into how the sector is navigating a shifting economic and demographic environment.