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April 9, 2025Multifamily Construction Slows: What Investors Need to Know Now
The latest housing data shows a significant slowdown in apartment completions, with new supply dropping sharply year over year. For multifamily investors, this shift could signal changing market dynamics, including potential rent growth in the coming months.
Multifamily Construction Declines
According to HUD and the U.S. Census Bureau, construction starts for buildings with five or more units rose 12.1% month over month in February but fell 6.6% compared to the previous year. More notably, apartment completions have dropped 15.8% year over year, indicating fewer units hitting the market.
At the end of February, 754,000 multifamily units were under construction—a 21% decline from the previous year. This suggests that supply growth is slowing significantly, which could impact rental market trends.
Impact on Rent Growth
As fewer apartments are completed, supply pressures may ease, leading to potential rent increases. Real estate investment trust UDR expects blended rent growth to rise from 2% to 3% by the end of the year. This could present an opportunity for investors to maximize rental income in the second half of 2025.
Outlook for Multifamily Investors
Experts predict 2025 will be a transitional year, with stronger growth expected in 2026. Key factors to watch include:
- Supply constraints – Fewer completed units may drive rental demand.
- Rent growth potential – Some markets may see stronger rent increases.
- Economic resilience – Job growth and wage trends will impact demand.
- Investment opportunities – Strategic acquisitions could position investors for the next growth cycle.
Final Thoughts
The decline in multifamily completions could signal a shift in market dynamics, with potential rent growth on the horizon. While 2025 may be a transitional year, strategic investors who position themselves now could benefit as the market moves into its next growth cycle.
Staying ahead of market trends is crucial for making informed investment decisions. Schedule a call today to explore opportunities and strategies in the evolving multifamily market.
