Elevated completion times stiffen pipeline and near-term deliveries
SANTA BARBARA, Calif., May 7, 2024 – Yardi® Matrix’s Q2 2024 Multifamily Forecast Supply update was slightly increased in the near term due to a somewhat larger under-development pipeline, which combined with elevated completion times led to marginal increases in the near-term forecast. However, overall new construction levels continued to decline, suggesting new supply will bottom out in 2026.
Yardi Matrix tracked markets had 1.3 million units under construction, 536,325 of which are currently in lease-up and anticipated to come online in 2024. The volume represents a 1.6 percent decrease quarter-over-quarter and slightly below the trailing six-month average of 545,905 units.
The remaining 728,357 units under construction represent an increase of 4.3 percent quarter-over-quarter and 21.2 percent year-over-year. The bulk of these units should be completed in 2025, but elevated construction times will extend some completions into 2026.
Construction starts declined in the second half of 2023, with the fourth quarter totaling just 107,746 units, which represents a 34.8 percent decline compared to Q4 2022. At 577,207 units, last year’s volume exceeded initial expectations.
Days in construction for both garden and mid-rise build types remained elevated, while high-rise properties posted an increase over completion times recorded in the last two quarters, but still below the levels reached in 2021 and 2022. These extended completion times counterbalanced the slowdown in new construction starts, increasing the under-construction pipeline.
“The combination of a weakening economic backdrop, persistently tight financial conditions and record levels of new supply will materially depress new-construction activity in 2024,” say Matrix analysts.
Review the Q2 2024 Multifamily Forecast Supply from Yardi Matrix.
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