Multifamily Housing: Supply Still Working Through the Pipeline

The multifamily housing market is in the process of absorbing excess supply created during the post-COVID building surge. A defining feature of this cycle has been how far units under construction climbed relative to new multifamily starts, creating a prolonged supply pipeline. 

Strong rent growth, low interest rates, and investor demand encouraged aggressive building. At the same time, supply chain disruptions and labor constraints were extending construction timelines, keeping projects under construction longer than normal. Even as new starts slowed, the backlog of projects already underway remained elevated.

Units under construction represent future supply that must be delivered and absorbed before new construction can meaningfully recover. Historically, multifamily starts do not recover until the construction backlog clears. The current cycle follows that pattern but at a larger scale due to both elevated building activity and extended delivery timelines.

The takeaway is straightforward: multifamily construction is constrained less by demand and more by excess and delayed supply. Normalization will depend on how quickly existing projects are completed and absorbed.

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Multifamily conditions vary significantly by region, price point, and end-use market. ITR Economics works with industry leaders to evaluate these differences, identify emerging risks and opportunities, and translate national trends into practical regional insight.

Organizations looking to better understand how multifamily markets are evolving across their regions often rely on ITR Economics to clarify what those trends mean for planning and strategy.