After a decade of elevated apartment construction volumes, supply has peaked in Houston and deliveries are scheduled to fade to more normal levels in the coming years.
In the year-ending 2nd quarter 2024, over 25,000 apartment units delivered in Houston, according to data from RealPage Market Analytics. This was the market’s highest annual completion total since the 1980s. In 3rd quarter 2024, annual deliveries faded to – a still significant – 24,900 units. Looking forward, completion volumes are scheduled to fade even further.
This slight decline in Houston’s annual supply volumes comes after a decade of elevated construction activity. Annual delivery totals have averaged over 16,700 units in the past 10 years (2014-2024), hitting big waves above the 20,000-unit mark in 2017 and again in 2021. In the decade before that (2004-2014), annual supply in Houston averaged closer to 9,200 units.
In the coming three years, annual supply volumes in Houston are expected to average at 13,400 units, with annual deliveries falling below the 10,000-unit mark by late 2026. This will put the market back on track with more historical norms.
Across the entire state of Texas, apartment starts plummeted in 3rd quarter 2024, indicating that supply will be subdued for the coming couple of years statewide.
Houston Submarkets with Big Supply
Submarket across Texas have seen sizable completion volumes recently. Among Houston’s 35 submarkets, all but seven had at least some new apartment deliveries in the year-ending 3rd quarter. Katy was the market leader, with over 3,000 units completed in the past year. This single submarket delivered more units in the last 12 months than 13 of the nation’s largest 50 apartment markets. In fact, annual completions in Katy doubled the stock delivered in Greensboro, Pittsburgh and Memphis in the last year. Houston submarkets with completions topping 2,000 units in the year-ending 3rd quarter include Rosenberg/Richmond and Spring/Tomball. Another five submarkets delivered between 1,100 units and 1,800 units in the last year, including the urban core of Downtown/Montrose/River Oaks.
Other Markets Seeing Peak Supply
Houston is not the only market to see deliveries top 25,000 units recently, but it’s not a big club either. Only three other major apartment markets nationwide saw annual deliveries top 25,000 units in 2024. Dallas logged completions just shy of 32,000 units in the year-ending 3rd quarter 2024. However, unlike in Houston, Dallas is expected to continue to see completions at this increased pace for at least the next year before volumes fade. Austin and Atlanta both topped out at over 25,000 units delivered in the year-ending 3rd quarter as well. While this should be a peak that fades quickly in Atlanta, supply volumes in Austin are scheduled to hit a high point in 2025 and then fade to more reasonable levels after that.
Two other major apartment markets – Phoenix and New York – are expected to see deliveries top 25,000 units in 2025. Phoenix is scheduled to see annual supply peak in 3rd quarter 2025, while the high for New York is expected by the end of that year.
