The US is building fewer apartments in 2024, with multifamily housing permits dropping nearly 30% since the pandemic. Elevated borrowing costs and a surplus of new units have led builders to seek fewer permits.
Reasons Why The US is Building Fewer Apartments this Year
High Borrowing Costs
Interest rates have surged, making construction loans more expensive and discouraging new projects.
Oversupply of Units
A backlog of pandemic-era projects has resulted in a near-record number of units hitting the market, limiting rent-price growth and deterring new developments.
Regional Variations
High Permit Areas
Despite the overall trend, certain areas continue to see high levels of multifamily housing permits. Cape Coral, FL, leads with 27 permits per 10,000 people this year, followed by Austin, TX (21), and Greensboro, NC (20). Many of these metros, particularly in the Sun Belt, experienced a surge in popularity during the pandemic, fueling a building boom.
Low Permit Areas
Conversely, some metros, especially in California, have issued very few permits in 2024. Stockton, CA, and Bakersfield, CA, issued no permits, while other areas like El Paso, TX, and Detroit, MI, issued only one per 10,000 people.
Impact on Rent Prices
In markets with a significant slowdown in new permits, property owners might increase rents as the supply of new units dwindles. However, rents are currently stable or falling in many areas where construction previously boomed.
The US is building fewer apartments due to high borrowing costs and an oversupply of existing units. This trend is expected to influence rent prices and housing availability in the coming years.
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