Multifamily Construction Slowdown Points to Sharply Reduced Supply Ahead

The latest multifamily housing data highlights a dramatic shift that could reshape rental markets significantly. In 2024, multifamily developers started 254,100 fewer units than they completed — marking the second-largest deficit on record, second only to 1974. This supply imbalance strongly indicates a sharp decline in new apartment inventory, expected to impact markets notably by 2026.

Sources: Jay Parsons, Modera Residential Research, U.S. Census

Further emphasizing this trend, total multifamily starts in 2024 fell to their lowest level since 2013 — a period when the housing market was still emerging from the Great Financial Crisis. At the same time, completions in 2024 reached their highest levels since 1974, further reinforcing the perception that the market is currently at or near a cyclical peak, poised for a downturn in supply.

These trends support forecasts that the combination of declining supply and continued robust rental demand could trigger renewed apartment rent growth as soon as early 2025. In fact, certain markets may begin experiencing upward rental pressure within this year.

While market forecasting is never an exact science, supply remains one of the more predictable variables. Multifamily starts are not only well below recent peaks but have also fallen beneath pre-pandemic norms. With construction activity slowing significantly, the industry is entering a new phase — one where the scarcity of new supply may drive rent trends in the years to come.

Multifamily real estate has historically demonstrated resilience during economic cycles, consistently outperforming other asset classes due to sustained rental demand. With fewer new developments coming online, investors may find increased opportunities to expand their portfolios and strategically invest in multifamily housing to capitalize on long-term growth and rental demand. Strong demographic trends, including population growth and urbanization, continue to drive demand for rental housing, reinforcing the long-term viability of multifamily investments. Additionally, as interest rate environments fluctuate, strategic financing approaches and regional market insights will be key in identifying the strongest opportunities for future growth.

To gain deeper insights into multifamily market opportunities and strategies for maximizing your investment returns amid these evolving trends, reach out to your investor relations professional or contact the investor relations team here.

Sources: Jay Parsons, Modera Residential Research, U.S. Census

Date Published 5/27/2025

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