America's new apartment boom is ending
Add Axios as your preferred source to
see more of our stories on Google.
More than half a million new apartment units are expected to be completed this year — down roughly 21% from last year's record.
Why it matters: That's still above the annual average this decade, according to a report by listing site RentCafe.
- But the pipeline is slowing as higher building costs, higher interest rates and a surplus of supply in some markets make developers cautious to start new projects.
What they're saying: "The boom in multifamily construction is ending," researchers at Harvard's Joint Center for Housing Studies wrote in a June report.
The big picture: In areas with lots of new construction over the past few years, particularly the South and West, rent increases have slowed or outright declined, Harvard's research shows.
- Meanwhile, rental markets remain tighter in the Midwest and Northeast.
Zoom in: Over half of new units on track to open in 2025 are located in the South, per RentCafe.
- The region's "business-friendly environment, relative affordability and less restrictive zoning laws … stand in sharp contrast" to more restrictive coastal areas, said Doug Ressler of data provider Yardi in the report.
Between the lines: More people are renting because homebuying is out of reach, keeping rents high even as hikes ease.
- And apartments that do get built are usually luxury apartments, not the affordable options many renters are searching for.
What we're watching: With fewer new apartments coming, rents could climb faster again.
