The U.S. is on track to complete over 500,000 new apartment units this year, marking the highest level of construction in decades.
Cities like New York, Dallas, and Austin are at the forefront of the boom, says a new report from RentCafe.
“The New York metro area tops the list with 32,935 new units expected this year; Brooklyn alone adding three times more apartments than Manhattan,” RentCafe said in a statement.
But Dallas, with 32,932 units expected, is nearly tied with New York. Plus Austin is anticipated to add 21,506. In fact, Texas metros will account for nearly 10% of all new apartments in the U.S., the report said.
Economic Uncertainties Loom
But the report also highlights concerns about the future. Rising borrowing costs and economic uncertainties are expected to slow down construction. By 2027, RentCafe expects the number of new completed apartments to drop sharply.
RentCafe also found most of the new units cater to higher-income renters, exacerbating the shortage of affordable housing options.
The construction surge is reminiscent of the early 1970s, driven by baby boomers coming of age. But construction will slowdown starting in 2025, the report says, with a potential rebound developing by 2028.
Few Areas Benefit
Despite the new supply, the majority of these apartments are concentrated in just 20 metro areas, leaving smaller markets underserved. Additionally, most of the new developments cater to high-end renters, raising concerns about the availability of affordable housing.
While some markets like New York, Phoenix, and Raleigh are expected to ramp up construction in the coming years, others like Houston, Dallas, and Atlanta are expected to see a significant slowdown. The mixed outlook suggests that the future of apartment construction will vary widely depending on the region.
For a detailed look at the data and projections, read the full report.
