- Yardi Matrix has increased its forecast for multifamily completions in 2025 and 2026 by 3.3% and 11.5%, despite a construction slowdown.
- Up 8% to 4.41M units, the sector is set to deliver the second-highest volume of new units since 2008, only trailing the record-breaking levels of 2024.
- The affordable sector is expected to see 16.3% more units by 2027 than in 2019, while market-rate and partially affordable properties will have less new supply.
- Single-family rentals are projected to go up by 188.5% over 2019 levels by 2027, revealing a growing shift in housing demand.
- Multifamily completion times are at their highest levels in years, with garden and mid-rise averaging 23.1 and 28 months, while highrises take 31.3 months.
Despite a slowdown in construction activity, the US multifamily sector is about to deliver its second-highest new supply since 2008, according to Yardi Matrix.
The report forecasts new supply will continue to grow in the short term, driven by affordable housing and single-family rentals, despite high interest rates.
Behind The Numbers
Although the under-construction pipeline isn’t as congested, multifamily completions for 2025 and 2026 have been revised upward by 3.3% and 11.5%, per GlobeSt.
This adjustment comes amid a slowdown in the under-construction pipeline, which peaked in March 2024 at 1.275M units but ended Q4 down 7.2% YoY to 1.165M units.
Despite this decline, the multifamily sector is expected to deliver the second-highest new supply since 2008, following the record-breaking volume of 2024. Yardi Matrix expects the new supply trend to hold steady through 2025 and 2026, before tapering off in 2027 as construction slows even more.
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Affordable Housing, SFR Lead
One of the key trends highlighted in the forecast is the growing importance of the affordable housing sector. Affordable units are projected to deliver 16.3% more new units in 2027 compared to 2019.
On the other hand, market-rate and partially affordable units, which accounted for most of the new supply in 2019, are expected to be a declining share of new multifamily units over the next few years.
The single-family rental sector is also seeing serious growth, with new supply expected to skyrocket 188.5% compared to 2019 levels by 2027.
Construction Delays
Completion times for multifamily projects have been affected by ongoing delays, with garden-style and mid-rise properties taking an average of 23.1 months and 28 months, respectively, to complete. Highrises are seeing even longer construction times, averaging 31.3 months.
These delays reflect ongoing industry challenges, including labor shortages and higher material costs, which have extended the time it takes to bring new multifamily units to market.
Hard to Finance
Despite a difficult financing environment driven by the Federal Reserve’s higher-for-longer interest rate policy, Yardi Matrix notes that there is still a large pool of potential projects for selective debt and equity providers.
However, the pace of new development will not match the rapid growth seen in 2022 and 2023. The prospective development pipeline grew 2% in Q4, reaching 3.27M units. The planned pipeline remained steady at approximately 1.14M units at the end of the year.
Looking Ahead
The US multifamily sector remains resilient, with more projected completions for 2025 and 2026, particularly in the affordable housing and single-family rental segments.
However, broader financing challenges, construction delays, and less-than-desirable interest rates are expected to persist, which may impact the pace of new development in the long term.
