Forecast predicts robust multifamily housing supply in 2023

With more construction projects underway, multifamily housing supply is projected to increase to nearly 7% by the end of the year, according to a new report from Yardi Matrix.

Yardi’s Q3 2023 supply forecast expects unit completions to increase to 6.9% in 2023 and 6.5% in 2024.

“The near-term forecast was increased as the under-construction pipeline continues to expand, and 2023 construction starts to date have not exhibited any material signs of a slowdown,” Yardi said in the report.

There are currently just over 1.1 million units under construction, most of which will complete in 2023 or the first half of 2024. Of this overall figure, about 429,626 are currently in lease-up – almost in line with the trailing 12-month average of 421,000 units.

Meanwhile, the number of under-construction units not in lease-up spiked 36.9% year over year to 688,420 units.

“Multifamily new construction activity has been relatively unaffected by the Federal Reserve’s rate hiking cycle,” said Ben Bruckner, senior research analyst at Yardi Matrix. “New-supply completions will remain robust in 2023 and 2024, with 484,000 units completing in 2023 and an additional 507,000 units completing in 2024.

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“Strong multifamily fundamentals will limit the extent of the downturn, with new-supply deliveries bottoming in 2026 at approximately 400,000 units. A gradual recovery in new supply takes hold in 2027 and continues into 2028. The alternative downside forecast models a sharper and deeper recession. In this scenario, near-term completions are unchanged. However, new construction activity is more sharply reduced over a longer time horizon. In this scenario, new supply bottoms in 2026 at 355,000 units.”

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