Faced with rising mortgage rates and record home prices, many households have turned to multifamily living as a more affordable alternative to single-family homeownership.
Developers are responding to this demand by adding more apartment units than at any time since the 1970s, according to Global Commercial Real Estate Service (CBRE), underscoring how multifamily housing has become a critical pressure valve for buyers priced out of traditional homeownership.
The multifamily housing market encompasses the portion of real estate devoted to residential properties that accommodate multiple households within a single structure or development. Examples include apartment buildings, condominiums, townhouses, and duplexes.
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From an economic perspective, this market is defined by the dynamics of supply and demand in the housing market, rental and purchase pricing, financing availability, and overall investment activity tied to these types of properties.
Unlike the single-family housing sector, which centers on detached homes, multifamily housing is especially significant in cities and fast-growing regions. It provides a practical solution where rising costs or rapid population growth make renting a more accessible option than buying.
Looking ahead, federal policy is reinforcing this trajectory. The Federal Housing Finance Agency (FHFA) has set Fannie Mae’s multifamily loan purchase cap at $88 billion for 2026, a more than 20 percent increase from the $73 billion cap in 2025.
The higher cap underscores expectations of continued multifamily growth and signals strong institutional support for liquidity in the sector.
Fannie Mae supports housing market affordability move
Government-sponsored enterprise Fannie Mae emphasized the importance of the cap increase.
“Fannie Mae remains committed to providing dependable liquidity and innovative solutions that support the multifamily housing market in America,” said Fannie Mae executive vice president Kelly Follain in a statement.
“U.S. Federal Housing’s 2026 multifamily loan purchase cap will enable us to continue this important work, ensuring people have access to quality, affordable places to live in communities throughout the country,” she continued.
“We look forward to partnering closely with our lenders and other stakeholders in the year ahead to deliver housing opportunities where they are needed most.”
FHFA highlights mission-driven housing
The Federal Housing Finance Agency clarified that the multifamily loan purchase caps include both Fannie Mae and Freddie Mac, which it refers to as “the enterprises,” and are $88 billion for each for a total of $176 billion.
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“To ensure a strong focus on affordable housing and underserved markets, U.S. Federal Housing will require that at least 50% of the enterprises’ multifamily businesses be mission-driven, affordable housing,” according to FHFA.
“Just like in 2025, multifamily loans that finance workforce housing will be excluded from the 2026 limits. All other mission-driven loans remain subject to the volume caps.”
FHFA monitors multifamily mortgage market
The federal housing agency clarifies that it continues to provide sufficient liquidity and support in the multifamily mortgage market.
“U.S. Federal Housing will continue to monitor the multifamily mortgage market and will increase the caps if necessary,” FHFA wrote. “However, to prevent market disruption, if the agency determines that the actual size of the 2026 market is smaller than was initially projected, it will not reduce the caps.”
Background on multifamily purchase caps
Since 2015, FHFA has imposed limits on the conventional (market-rate) multifamily activities of the enterprises.
- These caps are intended to ensure the enterprises provide liquidity to the multifamily market — especially for affordable housing and underserved communities — while avoiding displacement of private capital.
- To promote financing in affordable and underserved segments, FHFA initially excluded certain categories of multifamily business from the caps.
- In September 2019, FHFA revised the framework so that the caps applied to all multifamily activity, eliminating the earlier exclusions.
- For 2024, FHFA established a $70 billion cap for each enterprise, along with a requirement that at least 50% of business be mission-driven. Workforce housing loans were permitted to remain outside the cap.
- In 2025, FHFA raised the cap to $73 billion for each enterprise and continued the 50% mission-driven minimum.
- Workforce housing loans were again exempted from the volume limits in 2025.
Related: Fannie Mae predicts major mortgage rate change
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