A record number of new apartments – more than half a million – will hit the market by year’s end as strong rental demand continues to fuel a boom in multifamily construction, according to a new report from RentCafe. This would be the third year in a row that apartment construction hits a new high and the first year that the number of apartments completed exceeds 500,000.
The increased supply should slow rent growth, which would be welcome news for renters. According to RentCafe, the average rent for an apartment in the U.S. is $1,713. The New York metropolitan area continues to see the largest increase in new apartment supply in the country, followed by fast-growing markets in Texas like Dallas and Austin.
The new inventory comes at a time when the real estate market is facing a housing shortage. Despite the upswing in housing construction, demand continues to outstrip supply to meet the strongest growth in the renter population in the last 50 years, according to the report.
20 booming housing markets
Almost 60% of the new apartments expected to open this year are located in just 20 metropolitan areas.
Around two million new apartments are expected to come onto the market by 2028, but until that goal is reached, the multifamily housing sector is expected to slow, according to RentCafe’s report.
Developers are expected to deliver 15% fewer homes in 2025 than in the blockbuster year of 2024. “Most markets will not feel the impact of rapidly declining housing starts, which translates into lower completion rates, until the second half of 2025 – and more likely in 2026,” says Doug Ressler, senior analyst and manager of business intelligence at Yardi Matrix, which owns RentCafe. “All in all, this massive decline in housing starts across all regions sets the stage for a very different trajectory for the industry in 2026 and 2027.”
The researchers predict that housing construction will fall to a “10-year low” by 2027, with 319,000 rental units opening nationwide. After that decline, they forecast a rebound in 2028 that could even see a nearly 23% increase in new construction compared to last year.
The volatility expected over the next three years is due to ongoing challenges that developers say they continue to face in terms of high borrowing costs, which could prompt them to focus more on lower-risk projects and shift their focus to markets with the strongest housing demand and job growth.
