Multifamily starts have remained a bright spot for the economy even as single-family starts have slowed in recent months. There are currently 786,000 apartment units under construction across the country in the 100 largest metros. The surge in construction has been driven by pent-up demand nationwide.
It comes as no surprise that the Southeast and Mountain regions–which have seen scores of people and jobs migrating in–will see their inventory base grow the largest. Texas, which also experienced a surge in population and job growth following the pandemic, is responsible for nearly 15% of all units under construction in the top 100 metros. Meanwhile, the Midwest region has a more modest level of units under construction. Here slow and steady wins the race, with the inventory set to expand 3.4% as units deliver.
Apartment investors have a number of reasons to remain bullishly optimistic for the long-term outlook of the industry. Job growth in recent months has exceeded economist expectations, people who lived with roommates or family during the pandemic are forming independent households, and elevated prices in the housing market is creating a barrier for many young people looking to own.
In the short term however, investors and developers should keep an eye on fundamentals in red-hot markets like Phoenix, Miami, and Austin. Each market experienced a minor pullback in month-over-month asking rents in July as demand softened. Generally, though, most markets appear to be able to absorb the influx of new units coming online in the coming months and year.