In 2024, U.S. apartment construction saw a significant rise, reaching its highest level since the 1970s with nearly 592,000 new units completed. However, there has been a notable drop in new construction starts, down 27% from 2023, attributed to factors such as tariffs on building materials, labor shortages, and rising interest rates. This oversupply has led to increased vacancy rates and lower rents, discouraging further development. Many experts highlight a continued housing shortage, estimating a need for 1.5 to 5.5 million additional units nationwide, particularly in high-demand areas.
The increased supply has lowered rents and increased vacancy rates, making new development less profitable.
Tariffs on construction materials and labor shortages caused by dips in immigration will create headwinds for new construction.
Apartment starts were down 27% in 2024 compared with 2023, and down 37% from a recent peak of 531,000 in 2022, despite the historic rate of completions.
Experts estimate a shortage of 1.5 million to 5.5 million housing units in the U.S. due to long-standing supply issues.
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