Yardi Matrix Anticipates Slowdown in New Construction in 2024


SANTA BARBARA, Calif.– Multifamily construction starts declined in 2023, but exceeded expectations considering the turmoil in the financial markets. A new report on multifamily construction starts from Yardi® Matrix states that the number of units that broke ground in 2023 ranks third in recent years, behind 2022 and 2021.

Full year data for 2023 is collected with a lag. As such, data shows that there were 506,742 new construction starts in 2023, which is 25.3 percent below the 2022 volume. Of these, 454,182 units broke ground during the first three quarters, marking an 11.6 percent decrease from the volume recorded over the same interval in 2022. The decline in construction starts started in the third quarter.

“Yardi Matrix expects new construction to remain on a moderating trend in 2024. Meanwhile, multifamily completions will remain elevated in 2024 and early 2025 and will not bottom out until 2026,” say Matrix analysts.

Construction trends vary geographically. Half of the 678,771 units that broke ground in 2022 occurred in 22 markets, and during the first three quarters of 2023, 18 of these markets registered declines in new construction. Some posted declines of more than 40 percent, such as Indianapolis, Salt Lake City, Austin and Seattle. The highest declines were recorded in the Bay Area-South Bay (down 72.4 percent), Urban Chicago (down 55 percent) and Las Vegas (45.8 percent).

New construction remained on an upward trend in Phoenix, North Dallas, Raleigh-Durham and Tampa-St. Petersburg-Clearwater and picked up in Boston and Kansas City.

The composition of construction starts changed over the last decade. Affordable housing grew from 8.4 percent of the pipeline in 2013 to 13.4 percent in 2023, while the share of single family rentals increased from less than 1 percent in 2013 to 5.8 percent in 2023.