U.S. apartment construction has slowed sharply, with active projects down 37% YoY and pipelines at their lowest level since 2015. Roughly 542,800 units remain under construction, half the peak of Q1 2023, but ~354,000 units are still scheduled to deliver in the next 12 months. This creates a two-step market path: near-term lease-up pressure followed by tightening vacancy and rent power into 2026–27.
📌 Key Highlights
Units under construction: 542,800 (−37% YoY, lowest since 2015).
Peak pipeline (Q1 2023): 1.1M units — today’s pipeline is less than half.
Deliveries in next 12 months: ~354,000 units still expected.
Major pullbacks: Austin (~18K underway, <50% of 2024 level), Phoenix, Atlanta, Dallas, New York.
West Coast declines: San Jose, Oakland, Portland all down >60% YoY; Denver −58%.
Largest current builders: NYC, Dallas, Phoenix, Newark, Los Angeles (despite YoY pullbacks).
Demand side: absorption has remained positive nationally, but local frictions persist.
1. Comps & Pricing Dynamics
The near-term supply bulge guarantees pressure in high-delivery metros through 2025–26. Concessions, longer lease-ups, and muted rent growth will persist until these units are absorbed. However, with new starts collapsing, rent trajectories beyond 2026 point upward in supply-drawdown submarkets.
2. Liquidity & Transaction Flow
Buyers and lenders are already recalibrating. Deals in oversupplied metros like Austin, Phoenix, and Denver face longer diligence and wider spreads. Conversely, scarcity markets with thinning pipelines (e.g., parts of the West Coast, select Midwest cities) are beginning to attract forward-looking capital positioning for the 2026–27 rent recovery.
3. Sector Rotation
Sun Belt metros that dominated delivery pipelines are now correcting hardest. Meanwhile, large coastal markets—NYC, LA—remain active builders but are seeing moderated pipelines. This rotation suggests the next wave of rent growth will be more geographically balanced than the last cycle.
4. Execution Implications
Developers face thinner margins on current builds, as lease-up pressure collides with high debt costs. Investors evaluating acquisitions should model realistic lease-up timelines (12–24 months), full concession packages, and stressed DSCR scenarios. The upside emerges later: assets stabilized into 2026–27 will benefit disproportionately from the thinning supply funnel.
If I’m buying, I’m patient in Austin, Phoenix, and Denver until concessions peak. If I’m developing, I need a pre-lease or a uniquely advantaged site to justify breaking ground. The smart move is to underwrite conservatively today, then position to own pricing power when pipelines run dry.
📈 Read-Through
2025–26 = digestion phase: absorption vs. completions defines the near term.
2026–27 = tightening phase: rent growth should rebound in markets with the steepest drawdowns.
Geography matters: oversupply metros will trade at discounts; scarcity metros will regain premium.
Strategy shift: capital moves from chasing yield in heavy-supply metros to pre-positioning in supply-scarce submarkets.
Lease-up drag: Expect elevated concessions in Austin, Phoenix, Atlanta, Dallas through late 2026.
Pipeline collapse: Monitor starts—already at decade lows—for signs of further decline.
Vacancy tightening: By 2027, metros with >50% YoY pipeline cuts could see the sharpest rent rebounds.
Capital allocation: Watch private equity and institutional fund rotations into Midwest and coastal metros with lower delivery risk.
Get involved
We’re growing!
Want to volunteer, co-organize, or design race-day tees? We’re looking for help across logistics, hydration stations, and media.
