Dive Brief:
- New multifamily supply is set to bottom out in 2027 at around 444,343 units as the number of units under construction and in pre-lease continues to decline, according to Yardi Matrix’s third-quarter Multifamily Supply Forecast. After that, Yardi anticipates that new apartment supply will “expand only marginally” by 2031.
- Through mid-2026, multifamily starts ran slightly ahead of the 2024 and 2025 pace, suggesting deliveries in 2028 will be modestly higher than in 2027, per Yardi. Multifamily starts saw an unusually steep decline in May, according to HUD and U.S. Census Bureau data, but starts in buildings with five or more units have since risen.
- Yardi upped its forecasted completions for 2026 by 2.5% from Q1, but its predictions for subsequent years remain essentially the same. A return to the high levels of new apartment supply seen in 2024 and 2025 is “highly unlikely,” and a sharp decline is just as improbable, per Yardi.
Dive Insight:
Yardi’s near-term forecast assumes that the economic backdrop remains largely unchanged, with solid growth supporting rental demand.
Higher long-term interest rates will limit new apartment development and also “continue to constrain activity in the single-family housing market,” per Yardi. That means some would-be homebuyers will continue to rent, serving as an additional source of multifamily demand.
“The Iran War and tariff policy combined keep inflation modestly elevated; as a result, a reduction in either short- or longer-term interest rates seems unlikely,” according to Yardi.
Despite the overall slowdown from recent years, 21 of Yardi Matrix’s markets still have more than 8% of their housing inventory under construction, with the southwest Florida coast seeing the highest percentage at over 15%. Supply will remain “problematic” in those areas over the next year and a half, per Yardi.
Looking ahead, the recently passed 21st Century ROAD to Housing law “provides ample supply-side incentives for multifamily investment and new development,” according to Yardi.
The composition of new multifamily supply has been changing, and affordable and partially affordable multifamily projects will continue to make up a larger percentage of the new development mix in coming years.
In 2027, Yardi expects a 22% increase over 2020 levels in partially affordable units and a 44% increase in fully affordable apartments. At the same time, new market-rate apartment supply will fall 11% in 2027 compared to 2020.
After increasing significantly starting in 2023, single-family rental starts noticeably fell in the second half of 2025 and remained depressed to start 2026. That slowdown suggests there will be significantly fewer SFR completions in 2027 and 2028, according to Yardi.
Click here to sign up to receive multifamily and apartment news like this article in your inbox every weekday.
