Multifamily new construction starts have bottomed out however construction times have slowed down meaning a sizeable number of units are still in the pipeline, Yardi Matrix reports in a Multifamily Research Bulletin.
“Multifamily completions will remain elevated in 2025 and early 2026, before significantly declining in the second half of 2026 and 2027. Compared to last quarter’s update, the Q4 forecast for 2025 has been increased by 8.1% to 508,089 units. For 2026, the forecast has been increased by 6.0% to 371,509 units,” Ben Bruckner, Senior Research Analyst for Yardi Matrix, writes in the report.
Also the Wall Street Journal reports that landlords will likely have more pricing power next year if current trends continue as things are starting to change as vacancy rates have stopped rising. “The worst of the pressures on pricing from new supply are behind us,” Eric Bolton, chief executive of Mid-America Apartment Communities told the Wall Street Journal.
Like Yardi Matrix data, the Census Bureau showed a decline in multifamily construction starts taking hold in the second half of 2023 that bottomed in Q1 2024. Since April 2024, multifamily construction starts averaged an annualized pace of 332,000 units.
“Yardi Matrix continues to expect a gradual deceleration in labor markets and inflation with economic growth decelerating,” the report says. It adds that the deceleration “allows the Federal Reserve to continue to reduce policy rates at a gradual pace to close out 2024 and through 2025. Monetary policy should be materially less restrictive by mid-year 2025, which in turn should make capital conditions for new multifamily development considerably easier.”
Forecast for 2025 and beyond
In summary, the forecast expects new-supply completions to remain relatively robust in 2025 at roughly 508,000 units, followed by a noticeable decline in 2026 to 372,000 units. New supply bottoms in 2027 at around 327,000 units, with a rebound in new supply in 2028 and 2029.
“As always, Yardi Matrix is extremely focused on accurately maintaining our development pipeline data and identifying any changes in its evolution that will have a meaningful impact on future new supply,” Bruckner writes.
Read all details in the full Yardi Matrix publications here.
About Yardi Matrix
Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.
