A building boom. That’s what the U.S. apartment market is seeing this year, according to the latest research from Yardi Matrix.
In a report released in late August, Yardi Matrix said that construction crews will bring 420,000 new apartment units to the United States this year. That’s a 50-year high. According to Yardi, the last time apartment completions surpassed the 400,000-unit mark was in 1972.
And three Midwest markets are expected to rank among the busiest 20 major metropolitan areas this year when it comes to new apartment units: Nashville, Chicago and Minneapolis-St. Paul.
The New York metropolitan area is projected to deliver the most apartment units in 2022, beating out Dallas-Fort Worth for the top position for the first time since 2018. Overall, developers in half of the country’s top-20 metropolitan areas are now on an apartment building spree, with these metros expected to hit their five-year highs in new multifamily construction this year.
“The construction industry is finally returning to pre-pandemic levels of activity but is still being hampered by three familiar challenges: labor shortages; material costs and availability; and supply chain issues,” said Doug Ressler, manager of business intelligence at Yardi Matrix, in a written statement.
What’s behind this construction boom? Yardi Matrix points to pent-up demand for multifamily units across the country. This demand has only risen as many renters hold off on buying homes as inflation and interest rates rise.
In the Midwest, Nashville ranks as the hottest market for new apartment construction. Yardi Matrix says that this Tennessee city will deliver 9,620 new aparment units in 2022, ranking it as the 13th busiest new-construction market.
Chicago will see 8,573 new apartment units by the end of this year. That places the city as the 16th busiest in terms of new multifamily construction. Expect 6,266 new apartment units in the Minneapolis-St. Paul market, making it the 19th busiest new-construction market in the country.
Texas, as usual, was well-represented. Yardi Matrix reported that the Dallas market will see 23,571 new apartment units in 2022, placing it second only to the New York metro market. Austin ranked fourth on Yardi Matrix’s list, with 18,288 new apartment units projected to be delivered here during the year, while Houston ranked fifth with an expected 17,759 new apartment units.
Yardi Matrix said that the Houston market will see the highest number of apartment completions that it has seen in the last five years. Austin climbed three positions on the Yardi Matrix list this year to inch past Houston.