Multifamily Construction Decreases, but Completions Rise This Year

A Yardi Matrix Multifamily Supply Forecast update predicts that the company’s Q4 2023 report is still on course: new construction has eased, the under-construction pipeline is vigorous and elevated deliveries are expected for the remainder of 2024 and 2025.

Multifamily markets tracked by Yardi in Q1 indicated 1.25 million units under construction, with 483,207 currently in lease-up that are expected to hit the market this year. This number is slightly below the six month average of 518,075 units—and 8.7% behind last quarter.

The 766,353 units currently under construction but not in lease-up will be completed within the later months of 2024, 2025 or into the early part of 2026.This figure represents a 9.9% quarter-over-quarter increase and a 36.6% year-over-year increase.

Extended construction periods for garden and mid-rise properties played a role in bolstering the sturdy under-construction pipeline. Additionally, high-rise project completion times have returned to pre-COVID levels.

Construction starts are losing traction, however, last year’s volume surpassed expectations. In 2023, 518,869 units started construction—lagging behind those rates seen in both 2021 and 2022.

A weaker economy, tight financial conditions and record-low supply levels will contribute to the slowdown in construction activity in 2024. This reduction is expected to produce a 30% decline peak-to-trough in new supply.

Key takeaways:

According to Yardi Matrix analysts, “The large under-construction pipeline will deliver a record level of new supply in 2024, and a relatively large amount of new supply will come online in 2025, as well.”

For the full report, click here.

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