It’s no secret that the United States needs more affordable multifamily apartment units. But a new report suggests that relief for tenants seeking lower-cost apartments isn’t coming anytime soon.

Yardi Matrix in its February report on affordable housing, said that construction starts of affordable multifamily properties are slowing. This means that the need for these units will only continue to grow.

There is some good news, though. Yardi Matrix said that completions of affordable multifamily units are set to reach a multi-year high of 78,000 in 2025.

The problem, though, is that as the price of construction rises, the number of construction starts of affordable apartment units has already dropped. This means that the delivery of new affordable units will fall in the coming years all while demand for them is rising.

Yardi Matrix reported that starts of fully affordable apartment units fell by 28.7% in 2024 to 66,000. That is the lowest number since 2020.

What’s interesting is that the starts of market-rate apartments have fallen at an even faster rate, dropping by 47% to 208,000 in 2024. That’s the lowest this number has been since 2013.

What’s behind the drop in both market-rate and affordable multifamily construction starts? Yardi Matrix points to the rising costs of land, labor and materials. Rising insurance premiums, a lack of available labor, delays in entitlements and slower construction times are also playing a role.

These are especially important in the affordable arena. Yardi Matrix says that as construction costs rise, the same amount of government subsidies produce fewer affordable units.