Apartment construction is expected to drop 12% this year compared with 2019, according to a new report from RentCafe. Yardi Matrix is predicting 283,114 new apartments to be completed in 2020, which is the lowest level in five years and down from the peak of 345,000 units in 2018. The data is for rental apartments in large-scale buildings of 50 units or more.
While a construction slowdown has been seen since 2018, the COVID-19 pandemic is only exacerbating it. The report, which covers the nation’s 99 largest metro areas, states, “The downtrend is mainly due to the slower pace of construction, as a result of a shortage of available construction crews, funding, and permits, along with some temporary bans on construction projects in certain states. With projects dragging and some new projects hitting pause, many U.S. metros are likely to see fewer new apartments in the coming years.”
However, in some parts of the country, new housing to address local demand is moving forward.
With the population continuing to grow in the Dallas-Fort Worth metro, it is expected to complete 19,300 units by the end of the year—the most in the nation. New York’s metro area, which covers Manhattan, Brooklyn, Queens, and the surrounding suburbs, is second with a projected 15,952 new apartments, followed by Houston with 10,404 apartments and Atlanta with 10,202 apartments.
Seven of the most active large metros are expected to build more this year than in 2019 while 13 metros are seeing a year-over-year slowdown. According to the report, the San Jose, Calif., metro area is seeing the largest percentage increase in new apartments, adding 5,829 new apartments in 2020, double the number of units delivered last year. The Boston metro is expecting 30% more apartments, or 8,709 units, this year, followed by the Philadelphia metro area with an increase of 23%, or 4,461, new apartments.
At the bottom is Miami, which is expected to see a 53% drop in construction this year, with only 5,840 new apartments set to open, which is significantly lower than last year’s 12,533. Denver is close behind with an anticipated 51% drop, with 5,695 new apartments set to open this year.
Looking at the first half of the year, Texas cities led the way for the most apartment completions. Austin leads nationwide with 3,827 new apartments in the first six months, followed by San Antonio with 2,871. Rounding out the top five are Denver, with 2,434 new apartments; Charlotte, N.C., 2,269; and Brooklyn, 2,136.
