While we are still firmly in the most prolific apartment building cycle in U.S. history, supply volumes have finally peaked.
The first time apartment supply volumes hit a historic peak was back in 2nd quarter 2023, when quarterly completions surpassed 100,000 units for the first time since RealPage Market Analytics began monitoring the market in the early 1990s.
Record quarterly deliveries pushed annual completions past the 400,000-unit mark for the first time in late 2023. Since that milestone, delivery totals have continued to rise, hitting another record every quarter until now.
A little over 576,700 units were delivered in the year-ending 1st quarter 2025. That was slightly below the all-time peak of 585,200 units from calendar 2024. 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.
Supply volumes pushing past their peak doesn’t mean the historic construction wave is over by any means. Annual supply is scheduled to drop to about 431,200 units by the end of 2025. After that, deliveries are expected to fall off even further, returning to more historic norms by 2026 if current construction timetables hold.
By 2027 and 2028, supply volumes should fall to levels below historic norms from the past decade. Of course, these numbers fluctuate due to new projects getting underway and inevitable supply delays. But current levels of multifamily permits and starts are trending downward, further indicating that the historic supply wave is past its peak.
Both permits and starts for multifamily product have been generally trending downward for a few years now and are well behind recent highs from 2021 and 2022. In February, the seasonally adjusted annual rate for multifamily permitting fell to 404,000 units, a drop of nearly 16% year-over-year, according to the latest report from the U.S. Census Bureau. That number is well below the peak of around 700,000 units permitted at the end of 2021 and beginning of 2022.
Roughly 370,000 multifamily units started construction in the year-ending February. That pace was 6.6% lower than the previous year, and notably behind the annual peaks over 600,000 units seen in 2021 and 2022.
