By Nathalie Voit
New apartment construction in the U.S. is set to reach a 50-year high, according to data from listing service RentCafe.
By year’s end, 420,000 new rental units are projected to be delivered nationwide, marking a historic 50-year peak in multifamily construction. RentCafe said that apartment completions last surpassed the 400,000-unit mark in 1972.
The construction boom is driven by outstanding demand for rentals, particularly in southern coastal cities like Miami, FL, and Houston, TX. Places like New York City, where many people fled during the pandemic, also reported an influx of returns.
Red-hot housing prices have also contributed to increased demand for apartments. According to the S&P CoreLogic Case-Shiller U.S. National Home Price Index, home prices nationally advanced 19.7% year-over-year in May, down from 20.6% in April but still nearing record annual home-price growth. Soaring home prices have locked many would-be buyers out of the market and made renting more affordable.
The New York metro area is poised to deliver the most apartments in 2022, with 28,153 new rental units estimated by year’s end. Dallas-Fort Worth (the former record-holder in apartment deliveries) is expected to come in second with 23,571 new units expected to open this year, followed by Miami at 19,125 units.
Overall, half of the top 20 U.S. metros are projected to hit their 5-year peak for apartment construction in 2022. This includes newcomers like Nashville, TN, Chicago, IL, and Portland, OR––all of which were new entries in RentCafe’s top 20 list this year.
Houston, TX leads the nation in terms of new apartment completions, with 4,746 units built in the first half of 2022. Next are Austin, TX, and Seattle, WA, with 4,236 and 3,232 new apartments added in the first six months of the year.
The additional supply of units is expected to ease competition in the rental market and offer renters some price relief. However, lower rental costs are not expected to kick in immediately due to ongoing supply-chain woes.
“The construction industry is finally returning to pre-pandemic levels of activity but is still being hampered by three familiar challenges: labor shortages; material costs and availability; and supply chain issues,” Manager of Business Intelligence at research firm Yardi Matrix Doug Ressler said in the report.
