U.S. Apartment Construction Remains Near 50-Year High, Led By New York

construction, construction workers

U.S. apartment construction is still on a hot streak, with 420,000 units set to deliver by the end of 2022, nearly as many as record-setting 2021, according to a new report by RentCafé, using Yardi Matrix data.

The trend isn't specifically in response to the waning of the pandemic, but rather a longer-term, post-Great Recession surge in apartment construction. In 2011, only about 118,000 new units were completed, a number that has ticked upward nearly every year since then. By 2018, the number was 368,000 new units.

After a small downtick in 2019 and 2020, construction surged again last year, when 423,000 new units came online — the most since 1972, when builders completed 464,000 new units, RentCafé notes.

In those days, builders were responding to the demand created by the sizable first wave of baby boomers creating households for the first time.

That demographic is still a factor, as many boomers sell their houses and downsize to rental property, but today's construction boom is driven by pent-up demand for apartments across generations nationwide, according to the report. Additionally, some renters have postponed becoming homeowners due to inflationary pressures and rising interest rates.

Developers might be building even more units, if it weren't for construction headwinds.

"The construction industry is finally returning to pre-pandemic levels of activity, but is still being hampered by three familiar challenges: labor shortages, material costs and availability and supply chain issues,” Yardi Matrix Manager of Business Intelligence Doug Ressler said in a statement.

Greater New York is projected to deliver the most apartments in 2022, reaching the top position for the first time since 2018. A total of 28,153 new rental apartments — a record — will be completed in the metro this year, almost double the 2021 total.

From 2019 to 2021, the No. 1 market for apartment development was Dallas-Fort Worth. This year, that market will be No. 2, with 23,571 units completed, according to Yardi Matrix data.

Other top apartment development markets for apartments this year are (in order from No. 3 to No. 10) Miami, Austin, Houston, Phoenix, Seattle, Atlanta, Washington, D.C., and Los Angeles.

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