The Apartment Boom Is Ending—What’s Next for Renters?

Introduction

A wave of apartment construction over the past two years gave renters more choices, kept rent growth in check, and even brought generous incentives from landlords. But those benefits may soon disappear. Rising construction costs and higher interest rates have slowed new development, creating the potential for an apartment shortage in the coming years.

Recent Construction Boom Eased Rental Costs

In 2024, developers completed nearly 589,000 new apartment units, the highest number in decades. Another 500,000 units are expected in 2025, ensuring some continued relief for renters in the near term.

This surge in supply kept rent growth under 1% for 16 consecutive months, far below the double-digit increases seen in 2022. With more options available, landlords competed for tenants by offering rent discounts, free parking, and other perks.

Construction Slowdown Signals Future Supply Issues

While supply met demand in recent years, that balance is shifting. The number of new apartment projects breaking ground has dropped to its lowest level in over a decade. Developers, facing higher borrowing costs and construction expenses, are scaling back on new builds.

• In 2023, developers started fewer apartments than in any year since 2013.
• RealPage predicts only 265,000 new units will be completed in 2026, less than half of 2024’s total.
• Some markets, including major coastal cities, will see even sharper declines in supply.

With fewer new apartments being built, available rental inventory could tighten, leading to increased competition and rising rents.

How This Will Affect Renters

The impact of this construction slowdown may not be felt immediately, but renters should prepare for potential changes:

• Rising Rents – As supply dwindles, landlords may phase out incentives and increase rents, with projections suggesting steady rent growth starting in 2026.
• Increased Competition – Fewer new apartments mean more renters vying for available units, particularly in high-demand markets.
• Regional Differences – Southern and Mountain West cities, where most construction has occurred, may see slower rent hikes, while coastal cities with strict building regulations could experience sharper price increases.

Conclusion

The apartment rental market is shifting as new construction slows. While renters may still find deals in 2025, the long-term outlook points to tightening supply and rising costs. Those looking to secure affordable housing may want to act before the market changes.

‍