Multifamily new supply construction starts are now 40% below the peak level recorded in 2022, Yardi Matrix says in a new Multifamily Supply Forecast report.
This decrease, however, comes from a very high starting level, and a still-large inventory of properties remains to be completed.
Overall, the number of units under construction tracked by Yardi Matrix is declining. However, in 2025 the still-large under-construction pipeline will deliver the second-highest amount of annual new supply since the 2008 financial crisis, trailing only 2024’s record volume.
“This slowdown has begun to work its way into the under-construction pipeline, which will result in a contraction of new supply from 2025 through 2027. That follows a very high level of development activity and a large inventory of properties still to be completed.
“As a result, forecast completions for 2025 have been increased by 3.3% to roughly 525,000 units, with a 2026 increase of 11.5% to 414,000 units,” writes Ben Bruckner, Senior Research Analyst, for Yardi Matrix.
The continued elevated construction completion times are a key factor here, the report says, and some amount of the current under-construction inventory will not be completed until 2026. The current forecast update, therefore, anticipates new supply will not fully bottom until 2027.
“For the longer term, the current forecast assumes a higher-for-longer Federal Reserve policy will keep short- and longer-term interest rates elevated. Continued tight new development financing combined with long development lead times will cause construction starts to remain at the same level in 2025 as seen in 2024, resulting in new supply bottoming in 2027,” Bruckner writes.
Read the full report 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.