While multifamily starts have declined drastically, the pipeline of apartments under construction remains elevated due to long development lead times. Based on this data, Yardi Matrix has increased its supply forecast for 2025 by 8.1% to 508,089 units, and for 2026 by 6% to 371,509 units.
However, completions are expected to significantly decline in the second half of 2026 and 2027, when new supply is anticipated to bottom out at 327,000 units. A rebound is forecast for 2028 and 2029, when deliveries will move back over the 400,000-unit mark.
According to Yardi Matrix’s Q4 2024 Multifamily Supply Forecast, from September 2023 to June, the under-construction pipeline came in at or above 1.2 million units.
Of these, 567,997 are in lease-up. Units in lease-up decreased 9.7% quarter over quarter but increased 5.5% year over year. These units are projected to be completed this year or in the first half of 2025.
Units under construction, but not in lease-up, increased 2.7% quarter over quarter to 595,945; however, this segment decreased 11.3% year over year. These units are expected to be completed in the second half of 2025 or early 2026.
The annualized rate of new-construction starts has bottomed out at 325,000 for 2024, representing a 50% decline from 2022 and 2023 levels, according to Yardi Matrix. While its starts data is collected with a lag, it identified 73,158 units starting construction in the second quarter and anticipates that number increasing. Combining the first two quarters, starts stood at 154,607 units.
“While development activity overall is declining, it is declining at a slower rate than anticipated in previous forecasts,” noted the Q4 2024 Multifamily Supply Forecast report. “Under-construction inventory has dropped off the most in the Sun Belt, while under-construction inventory has expanded in multiple markets in the Northeast and California on a year-over-year basis.”
Elevated completion times are still hampering the industry, extending deliveries. Days in construction are at or near series highs for both garden and mid-rise developments. In the third quarter, the average garden-style property completion times were 688 days or 23 months, above the trailing four-quarter average of 676 days. This is a 12.1% increase over 2019’s average days for construction.
For mid-rise properties, the average property completion times stood at 741 days or 25 months, just slightly above the trailing four-quarter average of 740 days but improved from the series high of 770 days in the third quarter of 2022.
Completion times improved for high-rise properties, averaging 815 days or 27 months. This is below the trailing four-quarter average of 836 days and the peak of 1,042 days in the first quarter of 2021.
