US to Add Record Number of Apartments This Year

More than half a million apartments are expected to be completed this year, an increase of 9% over 2023 and 30% from 2022. New inventory is enough to house the entire population of Atlanta, with 60% of new apartments coming to market in just 20 metros, according to a study by RentCafe.

Construction is likely to slow down next year, with more than half of the 370 markets studied expected to see a decelerated pace of activity. Apartment deliveries may surge again in 2028, the report said.

The top market for apartment construction is New York, for the third year in a row, with nearly 33,000 new units expected to become available this year. Brooklyn is playing a key role in this growth, adding three times more units this year than Manhattan. New York metro’s apartment construction boom stems from the Northeast’s persistent housing shortage.

Texas was a surprising chart-topper in second place, with Dallas expecting to add only a handful fewer units than New York this year. Austin is expected to add 21,506 units. Together, these two markets will account for nearly 10% of all new apartments in the United States in 2024, the study found. Dallas’ consistent population growth, business-friendly environment, affordability compared to similar-sized metros, and strong infrastructure all are attractive for companies and construction projects.

Phoenix secured the fourth spot with an estimated 20,141 new apartments expected to open across the metro area before the end of 2024, and Atlanta rounded out the top five with 18,520 new ones expected by the year’s end.

By 2028, two million apartments are set to come online despite uncertainties in most markets that are causing fewer new projects to start. High-end apartments continue to dominate new developments, as borrowing costs and economic uncertainty are causing developers to reevaluate their strategies, leaving renters in some markets with limited affordable options, said RentCafe. Even with apartment construction reaching a new peak in 2024, higher borrowing costs are affecting the multifamily sector, prompting many developers to adjust their strategies for the coming years toward lower-risk projects in markets with strong demand and job growth.