The apartment sector remains firmly entrenched in the most prolific building cycle in U.S. history, but signs indicate supply volumes have finally peaked, according to a RealPage analysis.
More than 576,700 units were delivered for the year ending with the first quarter. That is slightly below the all-time peak of 585,200 units delivered during the 2024 calendar year, said the report.
“From this point on, delivery volumes are scheduled to drop off for the next few years as developers wrap up the current pipeline of projects,” RealPage explained.
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This marks the second historic apartment supply peak in the past five years. Supply peaked during the second quarter of 2023 when quarterly completions surpassed 100,000 units for the first time in at least three decades. These record quarterly deliveries pushed annual completions past the 400,000-unit mark in late 2023. Since then, delivery totals have continued to rise and have hit another record every quarter until now, according to RealPage.
The report noted that the historic construction wave is not over, even though supply volumes appear to have pushed past their peak. About 431,200 units are expected to be delivered by the end of this year. If current construction timetables hold, supply is expected to return to more historic norms in 2026, and in 2027 and 2028, supply volumes are likely to fall below historic norms from the past decade.
“Of course, these numbers fluctuate due to new projects getting underway and inevitable supply delays,” said RealPage. “But current levels of multifamily permits and starts are trending downward, further indicating that the historic supply wave is past its peak.”
Multifamily permits and starts have both been trending downward for a few years. According to U.S. Census Bureau data, multifamily permitting fell nearly 16% to 404,000 units on a seasonally adjusted annual basis in February. That number is well below the peak of around 700,000 units permitted at the end of 2021 and the beginning of 2022, according to RealPage.
Construction started on roughly 370,000 multifamily units for the year ending in February. That represents a 6.6% slower pace than the previous year and is significantly lower than peaks of 600,000 units in 2021 and 2022.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
