Will Multi-Family Construction End With a Whimper or a Bang?

ApartmentList economist Chris Salviati discusses the last wave of the Multi-Family Construction Boom and its Impacts.

Following a period of record-setting rent growth, the national median rent has since dipped slightly from its late 2022 peak. One of the key factors in this rapid cooldown has been a surge of new apartment construction adding supply to the market. 2023 saw the most new apartments completed since the 1980s and the number of multifamily units under construction peaked late last year at a record level. With nearly a million units still in the pipeline, this year is on track to bring even more new inventory than last.

Looking further ahead, though, the end of the current supply boom is already in sight. There has been a sharp pullback in the number of new multifamily projects getting underway, and that will translate to a slowdown in apartments hitting the market next year and beyond. This report breaks down the latest data on multifamily construction trends and explores what it can tell us about where the rental market is headed.

Total Multi-Family Housing Permits

On one hand, we've seen an abrupt slowdown in apartment construction activity. But on the other hand, when viewed over a longer horizon, current permitting levels remain fairly robust even after the decline. If 2024 does end with 525 thousand units permitted, as the year-to-date trend suggests, that level would be 26 percent below the 2022 peak, but it would still be 9 percent higher than the 2015 to 2019 average and higher than any year from 1987 to 2022.

Completions Still Rising

Despite the pullback in permitting, completions are still on the rise. It takes a long time for multifamily developments to get completed, and construction times have been getting even lengthier. In 2022, it took an average of 17 months for multifamily projects to go from construction start to construction completion (with an additional three month lag between permits being issued and construction getting underway).