New Apartment Construction to Reach Historic High of Half Million in 2024, Two Million Rentals to Open by 2028

The U.S. is poised to reach new heights in new apartment construction for the third year in a row, with 2024 expected to set a new record: By the end of the year, developers are on track to complete a staggering 518,108 rental units, marking a 9% increase compared to 2023 and a staggering 30% rise from 2022.

What’s more, 2024 is the first year in the history of U.S. apartment construction in which the number of completions will surpass the 500,000-unit threshold. The New York metro is leading the charge for the third consecutive year, followed by Dallas and Austin. Notably, the Dallas and Austin metro areas together are expected to welcome roughly 10% of all apartments opened nationwide by the end of December.

Looking ahead, 2 million apartments are set to come online by 2028, despite uncertainties in most markets that are causing fewer new projects to start. Furthermore, about 47% of the 369 metros analyzed are likely to build more in the next five years than they did from 2019 to 2023.

Demand for rental apartments in the U.S. continues to outstrip supply, even with recent construction efforts mirroring the building boom of the early 1970s — when a comparable number of rentals entered the market as Baby Boomers were coming of age — due to significant growth in the renter population in the last 50 years.

“The supply wave has brought 50-year high deliveries to certain metros … but the increased competition is slowing rent growth, especially in booming Sun Belt markets,” said Doug Ressler, senior analyst and manager of business intelligence at Yardi Matrix. And despite falling rents in the Sun Belt, demand for apartments has remained strong.

Of course, apartment construction varies significantly across regions due to various factors such as climate, local regulations, demand, and economic conditions. Still, nearly 60% of the new apartments expected to open in 2024 are clustered in the top 20 metros in our ranking. This means that the remaining locations are estimated to see little growth in their existing supply this year.

Additionally, most of the apartments built in the last five years, as well as those under construction, are high-end and cater mainly to upper-middle- and high-income renters. This focus on high-end apartments — combined with the concentration of new units in the largest U.S. metros — means that renters in smaller markets may continue to have limited affordable options.

Developers going full throttle in 2024, yet high borrowing costs, other uncertainties loom over future apartments

Even with apartment construction conquering a new peak in 2024, higher borrowing costs are affecting the multifamily sector, prompting many developers to adjust their strategies for the coming years. This means they might focus on lower-risk projects or shift toward markets with strong demand and job growth.

“The overall impact on the number of developers might vary by region. In places like Texas, for instance, the demand for apartments remains robust due to factors like corporate migration and high home prices. On the other hand, some markets are seeing a slowdown in new construction starts due to the economic environment.”

Doug Ressler
Senior Analyst & Manager of Business Intelligence, Yardi Matrix

Interestingly, some developers are noticing a shift in the market, with land sellers becoming more open to negotiation. This, along with reduced labor costs, is creating opportunities for those with a long-term perspective — even in areas currently experiencing oversupply. The outlook for these markets is expected to improve significantly within the next year and a half.

Looking ahead to 2025 and beyond, the apartment construction landscape is shaping up slightly differently. “Most markets won't see the impact of rapidly falling starts translating to lower completion levels until the second half of 2025, and more likely in 2026,” Ressler explained. “All said, this massive drawdown in starts across all regions sets the stage for a very different industry trajectory come 2026 and 2027.”

Specifically, following the record-high 518,108 apartments completed this year, developers are expected to deliver 440,478 new units in 2025, which will be a 15% decline in deliveries compared to 2024 levels. Then, the pace of construction is projected to slow even more through 2027 when deliveries are expected to reach a 10-year low with 319,000 rentals opened nationwide. After that, a significant surge is expected in 2028, when about 391,000 apartments are set to come online — up by nearly 23% compared to the year prior.

New York metro to open nearly 33,000 new apartments in 2024, barely edging out Dallas

Fueled by the Big Apple’s unique appeal — even with the high housing costs amid an ongoing shortage of rentals — the New York metro area is poised to build on last year's remarkable apartment construction performance. More precisely, in 2024, New York is set to lead the nation once again with 32,935 new rental units expected before the end of December.

Of these new apartments in New York metro, almost 30% (9,379 units, to be exact) will open in Brooklyn alone, followed at a great distance by Manhattan, which will welcome 2,979 new rentals. Local developers are also set to deliver 2,412 units in neighboring Jersey City, NJ — a long-time rental competitiveness hotspot in the U.S.

In this case, New York metro's apartment construction boom stems from the Northeast’s persistent housing shortage. To that end, the only other Northeastern metro to join our top 20 for new apartment completions in 2024 is Boston, which entered our ranking at #19 with 8,022 brand-new rentals slated to open in the area this year.

This surge in new apartments in Boston is largely due to the metro's booming life science sector, which is driving up demand for housing. For instance, the cities of Boston and Cambridge together host more than 1,000 biotech companies, big and small, making the metro area a leading biotech cluster in the U.S. Consequently, the area has consistently attracted professionals, students, and their families, thus increasing the need for apartments.

Breathing down New York's neck for the top spot is Dallas metro, where developers are on track to complete a total of 32,932 rentals in 2024. It’s worth noting that new apartments in Dallas proper represent the bulk of expected completions metro-wide (5,267 units), with Fort Worth following closely with 4,608 rentals and Frisco set to open 2,020 new apartments this year.

Dallas' consistent population growth (the metro added more than 150,000 new residents between July 2022 and July 2023 alone); its business-friendly environment; affordability compared to similar-sized metros; and good infrastructure keep attracting companies and construction projects. Naturally, corporate relocations create jobs and boost wages throughout the metroplex, further fueling economic growth and attracting newcomers who need housing.

And, to address the growing need of apartments, the city of Dallas could leverage its untapped vacant land and streamline the permitting process, potentially adding up to 100,000 new apartments.

Claiming third place for apartments slated to open in 2024 is Austin, another booming Texas locale and the second-fastest-growing metro in the U.S. Here, developers are working to complete 21,506 new rentals before the end of the year.

In particular, the city of Austin alone is set to welcome an astounding 12,157 new apartments by year-end, or more than 56% of all expected deliveries in the metro — and it’s easy to see why: Austin is growing and evolving, propelled by a strong job market and opportunities in tech, healthcare, and hospitality, along with the arrival of major tech companies lured by Texas’ lack of income tax. Plus, remote work has consistently brought people from more expensive coastal cities, and even though housing prices are rising, apartments in Austin are still more affordable than those in places like San Francisco or New York.

Phoenix secures the fourth spot with an estimated 20,141 new apartments expected to open across the metro area before the end of 2024. Most of this construction is concentrated in Phoenix proper, and developers are on track to deliver 7,389 units, representing nearly one-third of all apartments slated for completion in the area.

Once dubbed America's least sustainable city, Phoenix is now actively combating climate change and water scarcity in an effort to become "the world's most sustainable desert city". This shift towards sustainability could be one of the reasons why the city has been attracting more and more environmentally conscious businesses and residents in recent years, thus driving demand for apartments for rent in Phoenix.

Finally, Atlanta rounds out the top five with 18,520 new apartments expected by year-end. Here, too, Atlanta proper leads construction in 2024, with 7,184 units slated for completion, which represents nearly half of all new apartments expected metro-wide.

Notably, the demand for apartments in Atlanta is fueled by a confluence of factors, including the innovation district surrounding Georgia Tech, the city’s rising prominence as a transportation hub, and sustained population growth. Its skilled workforce, business-friendly environment, cultural attractions, and rising wages further contribute to the city's economic expansion.

Click on each tab to see the number of new apartments estimated to be completed by the end of 2024 in various metros across the U.S.:

New York is poised to reign over new apartment construction through 2028, Dallas metro trails far behind

After years of surging apartment construction throughout the U.S., will the next few years look anything like the recent past? According to Yardi Matrix data, developers are expected to complete about 2 million new apartments through 2028, which is almost on par with the number of rentals that came online nationwide during the five years prior to 2024.

However, unlike the steady growth in deliveries between 2019 and 2023, the next five years will see a gradual slowdown in construction each year until 2027, with a big jump expected in 2028. This slowdown is mainly because apartment construction starts have significantly dropped so far in 2024 compared to the same time in 2023. Moreover, apartment construction starts are expected to keep falling throughout the next year as developers struggle to get financing due to stricter loan standards amid economic uncertainties, which causes delays in projects.

Even so, the New York metro area is set to build a staggering 150,327 new apartments by 2028. By comparison, developers completed 116,207 apartments in the metro area in the five years leading up to 2024, putting New York second in apartment completions during that period.

Meanwhile, Dallas — the top builder from 2019 to 2023 with 128,418 new apartments — is projected to fall to second place through 2028, with an anticipated 108,178 units, which is about 28% below New York's expected apartments. This indicates that the metroplex is experiencing the aftereffects of its recent development surge (even though its population grew by 152,600 residents in 2023 alone), sustaining the demand for apartments.

Coming in third is Austin metro, which is set to welcome 80,046 new apartments by 2028. That's about 8,000 more units than those opened between 2019 and 2023. Here, Austin's booming employment market, particularly in tech, is a significant draw for new residents looking for high-paying STEM jobs. The expansion of major employers, including Tesla and Oracle, is expected to further increase the demand for rental apartments in the area.

Next up is Miami, the hottest rental market in the U.S., where each vacant apartment attracts 19 hopeful renters amid sky-high occupancy rates. This bustling Florida metro is set to welcome 75,736 new apartments by 2028 — half the number of units expected in New York. However, even though developers are expected to open 2,265 more units throughout the next five years as compared to 2019-2023, the upcoming apartments are unlikely to meet the pressing demand for housing in the metro.

Rounding out the top 10 metros for new apartment construction anticipated in the next five years are Los Angeles with almost 65,000 units; Phoenix with 60,833 units; Washington, D.C., with just more than 58,000 units; Atlanta with 57,104 units; Houston with 55,785 units; and Charlotte with 54,647 units. They are followed by Denver; Seattle; Nashville, TN; Orlando, FL; Boston; San Antonio; Raleigh, NC; Chicago; Tampa, FL; and Minneapolis-St.Paul, MN.

By contrast, looking at the previous five-year interval, Atlanta emerged as the fifth busiest builder in the U.S. with 73,460 apartments opened. Then comes Washington, D.C. with 72,709 units, followed by Los Angeles with 72,068 units; Austin with 72,011 units; and Seattle with 60,045 units. Denver completes the top 10 with 50,599 units.

The metros in this five-year apartment construction comparison are mostly unchanged. However, it’s worth noting that San Antonio and Raleigh are newcomers, replacing San Francisco and Philadelphia.

Phoenix, Raleigh follow New York’s lead in new apartment growth, some heavy builders slow down through 2028

Delving deeper into the five-year comparison, we found that about 47% of all analyzed metros are expected to push the pedal on new apartment construction in the next five years. The common thread for all  of these metros is sustained economic growth that attracts new residents in search of better opportunities, thus paving the way for new apartments.

Besides New York — which is on track to open 34,120 more units than it did from 2019 through 2023 — the Phoenix metro area stands out for significantly increasing its apartment completions. Specifically, Phoenix will see 11,233 more rentals opening by 2028 compared to the five years leading up to 2024, highlighting the demand for housing in the metro. In addition to being a financial hub, major investments in semiconductor and battery manufacturing facilities will create thousands of new jobs in the coming years. Phoenix is also an attractive location for financial technology startups thanks to Arizona’s regulatory FinTech Sandbox.

Not to be outdone, Raleigh is set to open 11,174 more apartments by 2028 compared to the number of rentals completed in the five years before 2024. Ranked #1 among the best places to start a business, Raleigh benefits from major employers and leading educational institutions, with many university graduates choosing to stay in the area after completing their studies and pursue job opportunities provided by the Research Triangle Park.

Interestingly, a few smaller-sized metros are also expected to see an apartment construction spree throughout the next five years. Namely, new apartments in Youngstown, OH, metro are anticipated to surge by a whopping 6,258 units, up from a very modest 191 rentals completed between 2019 and 2023.

Here, Youngstown State University's expansion has fueled job growth in the area in recent years, while the presence of major healthcare providers has diversified the local economy. Additionally, Youngstown’s focus on tech sector growth, led by the expanding Youngstown Business Incubator, is attracting young professionals. All these factors combined are fueling demand for apartments in the metro.

Similarly, Sherman-Denison, TX, is on track to build 4,001 new apartments by 2028, which is 3,384 units more than the number of rentals opened between 2019 and 2023. Just 40 miles north of the Dallas-Fort Worth metroplex, the area is experiencing significant economic growth, particularly in semiconductor manufacturing and technology.

On the other hand, several large metros are set to slow the pace of new apartment construction by 2028, yet they remain some of the nation's heaviest builders. Specifically, Houston will welcome 28,187 fewer new apartments compared to the five years leading up to 2024, while Minneapolis-St. Paul will see 20,630 fewer rentals. Similarly, Dallas is expected to introduce 20,240 fewer units by 2028, followed by Atlanta with 16,356 fewer rentals and Seattle with 14,993 fewer units.

Looking at the other large rental hubs in the U.S., the Seattle metro area is set to introduce almost 15,000 fewer apartments until 2028 than it did between 2019 and 2023, while Washington, D.C., follows closely with 14,657 fewer apartments. Next, Chicago metro is expected to welcome about 13,000 fewer rentals, and the San Francisco metro area is set to open some 12,300 fewer units, with Los Angeles expected to introduce about 7,100 fewer apartments by the end of 2028.

Methodology

RentCafe.com is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the U.S.

To compile this report, RentCafe’s research team analyzed new apartment construction data across 369 U.S. metropolitan statistical areas. The study is exclusively based on apartment data related to buildings containing 50 or more units. Metros with fewer than 300 units or fewer than two properties/buildings were only included in the totals, not in the rankings.

The Bronx and Staten Island were not included in the New York metro data set.

Apartment data was provided by our sister company Yardi Matrix, a business development and asset management tool for brokers, sponsors, banks, and equity sources underwriting investments in the multifamily, office, industrial and self-storage sectors.

Apartment projections at the metro and city level for 2024 were calculated based on a Yardi Matrix proprietary algorithm that includes confirmed and likely completions for 2024 based on the issuance of a certificate of occupancy. After the certificate of occupancy is issued, the status of the property can be considered “completed.”

Apartment projections are estimates and subject to change. Actual apartment completion dates depend upon a variety of factors and may change.

Data on estimated population by metro area was according to the U.S. Census Bureau.

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