Overview

As the multifamily industry reflects on 2025, the market enters 2026 at a clear inflection point.

After two years of elevated interest rates and muted transaction activity, the Federal Reserve’s December rate cut — its third of the year following moves in September and October — became a defining moment late in 2025, adding to the reset expectations across the capital stack. Together, the three 25-basis-point reductions brought the benchmark rate down to 3.50%–3.75% by year-end. Even so, Fed officials entered 2026 signaling caution, projecting only one additional cut this year as they wait for a clearer read on economic conditions.

For operators, lenders, and investors, the question coming out of 2025 is not whether the easing cycle has begun — it objectively has — but how quickly these cuts will translate into improved deal flow, pricing stability, and clearer underwriting.

Drawing from CF Capital’s transaction experience, market observations, and insights shared throughout 2025, this White Paper looks back at the lessons that defined the past year and outlines how they are shaping multifamily performance and investor behavior heading into 2026.

While national data provides important context, the emphasis here is on the pressures we observed on the ground throughout 2025: cap-rate shifts, operational headwinds, and the continued importance of conservative underwriting in a market where fundamentals remain sound but uneven.

These takeaways reflect not only where the market ended 2025, but where decision-making pressure is most likely to concentrate in 2026.