According to Freddie’s report, annual rent growth will likely end 2022 at around 6-8%, and gross income will increase at a 3.5% pace. While multifamily fundamentals remain strong, the vacancy rate is projected to rise modestly to 5.1%.

Multifamily construction levels remain extremely high, which could put additional pressure on fundamentals in some markets,” Freddie Mac wrote in the report. “In 2023, Freddie Mac expects the best-performing markets to be predominately smaller southwestern and Florida markets. The bottom performing markets are a geographically diverse mix of small and large markets, many of which are expected to see high levels of new supply.”

Additionally, Freddie Mac expects origination volume to fall 5.5% to $460 billion at year-end, continuing a decline of 4-5% to $440 billion in 2023, given the economic uncertainty and volatile Treasury rate environment. However, fundamentals are predicted to rebound slowly in the second half of the year as the market stabilizes.