US Apartment Permits Fall Below Pre-Pandemic Levels
A new report from Redfin, the technology-powered real estate brokerage, reveals a significant slowdown in apartment construction across the United States. The report, based on an analysis of U.S. Census Bureau data, indicates that developers obtained permits to build 12.4 multifamily housing units for every 10,000 people in the U.S. over the past year.
This figure represents a 27.1% decrease compared to the pandemic-era building boom, when permits reached 17 units per 10,000 people. It also marks a 5.5% decline from the pre-pandemic average of 13.1 units per 10,000 people. The analysis focuses on building permits for multifamily units in buildings with five or more units.
Pandemic-Driven Boom and Subsequent Slowdown:
The COVID-19 pandemic triggered a surge in rental demand, fueled by the rise of remote work, which allowed many Americans to relocate. This led to a construction boom, particularly in the Sun Belt region, with cities like Austin, TX, and Tampa, FL, experiencing rapid growth in apartment development. As a result, 2024 saw a record number of new apartments completed.
However, the market dynamics have shifted. Rents are now flattening, and elevated borrowing costs are making new construction projects less financially viable for developers.
Redfin Senior Economist Sheharyar Bokhari explains, “New apartments are being rented out at the slowest speed on record, and builders are pumping the brakes because elevated interest rates are making many projects prohibitively expensive. At some point in the next year, the slowdown in building will mean that renters have fewer options—potentially leading to an increase in rents.”
Regional Variations in Multifamily Permitting:
Despite the overall decline, some metropolitan areas are still experiencing significant multifamily housing development.
- Leading Metros: Austin, TX, leads the nation in multifamily permitting, with 64.5 units permitted per 10,000 people over the past year. Other Sun Belt metros also rank high, including Cape Coral, FL (59.6), North Port, FL (53.3), Raleigh, NC (41.1), and Orlando, FL (40.7).
- Lagging Metros: At the other end of the spectrum, some metros have seen minimal apartment construction. Stockton, CA, recorded zero new permits in the past year, the lowest among the metros analyzed. Other metros with very low permitting rates include Bakersfield, CA (0.8 units per 10,000 people), El Paso, TX (1.6), Providence, RI (1.6), and Baton Rouge, LA (1.9).
Decline in Multifamily Permits Across Most Metros:
The Redfin report highlights a widespread decline in multifamily construction activity. Nearly two-thirds (63%) of the major metropolitan areas analyzed have experienced a decrease in multifamily permits since the pandemic.
- Largest Declines: Stockton, CA, saw the most significant drop, with permits per 10,000 people plummeting to 0 from 5.7 (a 100% decrease). Other metros with substantial declines include Colorado Springs, CO (-82%), Boise City, ID (-64%), Minneapolis (-62%), and Jacksonville, FL (-61%).
- Increased Permitting: While most metros saw declines, a few experienced growth in multifamily permitting. Oklahoma City led the list, with a 193% increase (though the current rate is still below the national average). Other metros with notable increases include Pittsburgh (+184%), Hartford, CT (+102%), Baton Rouge, LA (+90%), and Milwaukee (+88%).
Implications for the Rental Market:
The slowdown in apartment construction has potential implications for the rental market. As fewer new units become available, renters may face limited options, which could put upward pressure on rents in the future. The report suggests that this situation may develop within the next year.
About Redfin
Redfin is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, and title insurance services. We run the country’s #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we’ve saved customers more than $1.8 billion in commissions. We serve approximately 100 markets across the U.S. and Canada and employ over 4,000 people.
