In the aftermath of the pandemic, the multifamily industry experienced a generational expansion, fueled by historically low interest rates. This favorable financial climate spurred developers to accelerate their building projects, particularly in the Sunbelt region, resulting in a substantial influx of new apartments over the last couple of years. However, the shift to a high-interest rate environment over the past two years has tempered this rapid development. The impact of this slowdown is expected to become evident in 2025, as the pace of new constructions adjusts to the new economic conditions.
By 2025, many markets, particularly in the Sunbelt region, are expected to experience a significant drop in the delivery of new units. This anticipated decline in new supply is poised to alleviate the downward pressure that new constructions have been placing on rent growth and occupancy rates. This adjustment could provide a much-needed stabilization for the multifamily housing market in these areas.
Austin is set to experience the most significant reduction in new multifamily units in 2025, decreasing from 26,000 units in 2024 to just 9,900 units. This adjustment marks the largest nominal decrease among the markets examined.
The Metroplex is anticipated to see a significant reduction, with 14,400 fewer units added to its inventory in 2025. The northern suburban areas continue to command the most construction activity, reflecting the demographic and economic growth trends in the region.
Over the last 12 months, the number of multifamily units breaking ground in Atlanta has decreased by nearly 48% from its peak in the fourth quarter of 2022. This slowdown is projected to result in nearly 10,000 fewer units being completed in 2025 compared to 2024.
In the past year, developers delivered a staggering 21,000 new apartment units. However, a significant shift is on the horizon for 2025, with expected deliveries reducing to 12,000 units in 2025, a shift local owners and operators will welcome.
| Market | 2024 Full Year Delivered Units (Estimated) | 2024 Supply Expansion % | 2025 Full Year Delivered Units (Estimated) | 2025 Supply Expansion % | Change in Delivered Units (2024-2025) |
|---|---|---|---|---|---|
| Austin - TX | 26,222 | 8.4% | 9,923 | 3.1% | -16,299 |
| Dallas-Fort Worth - TX | 34,922 | 3.9% | 20,508 | 2.2% | -14,414 |
| Atlanta - GA | 21,961 | 4.2% | 12,045 | 2.2% | -9,916 |
| Houston - TX | 18,715 | 2.6% | 9,172 | 1.3% | -9,543 |
| Phoenix - AZ | 20,309 | 5.0% | 12,055 | 2.9% | -8,254 |
| Denver - CO | 16,005 | 5.1% | 7,848 | 2.5% | -8,157 |
| Tampa - FL | 11,323 | 4.9% | 5,334 | 2.2% | -5,989 |
| Nashville - TN | 12,302 | 6.9% | 6,886 | 3.7% | -5,416 |
| Washington - DC | 13,632 | 2.4% | 8,243 | 1.4% | -5,389 |
| Seattle - WA | 12,817 | 3.2% | 7,543 | 1.9% | -5,274 |
| San Antonio - TX | 10,618 | 4.7% | 5,416 | 2.3% | -5,202 |
| Chicago - IL | 9,177 | 1.6% | 4,257 | 0.7% | -4,920 |
| Philadelphia - PA | 11,652 | 3.1% | 6,959 | 1.8% | -4,693 |
| Huntsville - AL | 5,506 | 11.9% | 1,308 | 2.8% | -4,198 |
| Jacksonville - FL | 7,322 | 6.0% | 3,220 | 2.6% | -4,102 |
