The general consensus surrounding this year’s multifamily outlook remains consistent — the sector will experience some softening due to a large amount of new supply set to deliver this year.

Yardi Matrix experts project 320,000 new units coming online in 2017, the most to hit during this cycle. Most of this supply falls within a handful of the sector’s largest metros and all of these new apartments are on the high end of the spectrum, Yardi researcher Paul Fiorilla said.

Despite the sector’s strong absorption and national occupancy rate being at a 95.6% high, new supply is expected to negatively impact rents, leading to a deceleration in rent growth. Markets adding a significant number of new units include Nashville, Seattle, Miami, Denver, San Antonio, Dallas, Austin and Portland.

Apartment demand is still strong, driven in large part by Millennials. While Millennials are aging (they now fall between the ages of 20 and 35) and will incrementally shift demand from renting to homeownership as they begin to start families, a large portion of the group has just barely hit prime rental age.

In its economic outlook for the year, Yardi Matrix reported the number of Millennials expected to hit the prime renting ages of 20 to 34 will exceed 2 million this year. That’s nothing compared to the whopping 70 million expected to peak in 2024 — which means multifamily can expect solid demand from Millennials for at least the next seven years.

Despite concerns surrounding supply, average national apartment rents rose $5/month in January, driven by strong fundamentals and a healthy capital market. Rents rose to an average $1,315/month in the 124 markets Yardi tracks, up 4.6% annually.

“What January’s numbers show is that as we head into 2017 the market is still very strong and the fundamental drivers are positive,” Fiorilla said. “Looking at things on a big-picture basis — demographics, job creation and household formations, which are key to multifamily demand, are still good. All the things that have contributed to the strength of the sector over the last few years are in effect.”