2024 U.S. Housing Market Poised For The Largest Influx Of Multifamily Housing Supply Since The Nixon Era

Source: Fast Company, Lance Lambert
Photo: George Becker /Pexels

Nearly 672,000 apartment units are projected to be completed in 2024, according to RealPage, which could help decelerate rent growth.

In 2023, the U.S. witnessed a surge in apartment supply, reaching the highest levels since 1987, with more than 439,000 units completing construction, according to RealPage. This influx has given renters a plethora of options and significantly decelerated rent growth, with outright apartment rent declines in many markets.

Here’s the intriguing part: Last year was just the warm-up act.

According to the latest forecast from RealPage, a property management software company in the multifamily sector, 671,953 apartment units are projected to be completed in 2024. This would represent the highest level since 1974, the year of President Richard Nixon’s resignation.

“In all likelihood, 2024 will bring another year of more supply than demand—adding another challenge for apartment investors also confronting higher expenses and elevated debt costs,” Jay Parsons, chief economist for RealPage, tweeted on Thursday.

Parsons added: “That means renters suddenly have a lot more options, and in turn, [apartment] rent growth has evaporated.”

Most of the multifamily supply expected to come online this year will be in fast-growing Sun Belt markets, including Nashville, Austin, and Dallas.

The total stock of U.S. apartment units is expected to increase 3.5% in 2024, according to RealPage’s forecast. That would mark the highest annual uptick since 1974, and well above last year’s 2.4% jump.

But the apartment supply surge in 2024 is not expected to carry over into 2025 and 2026.

“Those projects are delivering into a very different environment in 2023-24, and consequently, starts have plunged. Supply will drop way off in 2025-26,” Parsons wrote. “The [apartment sector] outlook should substantially improve in 2025-26, barring a collapse in the economy, given the certainty of far less supply.”

Big picture: A substantial amount of apartment supply is anticipated to come online in 2024, exerting downward pressure on U.S. apartment rents—an effect that may contribute to fulfilling the Fed’s inflation mandate. However, don’t expect the exact same level of weakness in the single-family rental market, which continues to benefit from millennials transitioning from their apartment years to single-family home years.

https://www.fastcompany.com/91009879/housing-market-2024-multifamily-housing-supply