U.S. Apartment Market Rebalances in Q1 as Deliveries Drop 53%

2 articles · Updated · multifamilyaffordablehousing.com · Jun 29

93,277 apartments were absorbed in the first quarter, helping push effective rents up 0.38%, occupancy to 94.9% and renewal rates to 56.1% despite weak broader economic growth.
75,205 units were delivered in Q1—down 53% from the late-2024 peak—while units under construction fell about 50% from early 2023 and new starts stayed far below long-term renter demand.
6.5% mortgage rates and a more than $1,000 monthly cost gap between renting and owning are extending renter demand, with renters now accounting for roughly 80% of U.S. household formation.
$805 billion in 2026 commercial mortgage originations is projected by the Mortgage Bankers Association, while agency lending caps rose to $88 billion each for Fannie Mae and Freddie Mac, supporting a more active multifamily capital market.
42% construction-cost inflation since 2020, plus tariff-related pressure, is keeping many new projects from penciling out, pointing to a tighter apartment supply backdrop over the next two to three years.