For the first time in four years, construction of new apartments across the United States has fallen below the 10-year average.
The exception is the Northeast, where multi-family housing saw 20 percent growth led by a new surge of activity in the New York City metro area.
A Nov. 2 analysis by RentCafe reported a 27 percent decline in the number of new units expected to open this year, to an estimated 442,395 from last year’s 605,768.
The number has also fallen below the 10-year average of nearly 466,000 units.
Compiled by RentCafe’s sister company Yardi Matrix, the overall analysis examined new apartment construction data from 369 U.S. metro areas, covering buildings with 50 or more units.
“The outlook for 2026–2027 is shaped by the number of apartments currently being built, which continues to shrink,” Yardi Matrix senior analyst Doug Ressler said. “That means fewer new properties will be completed in both years compared to 2024 and 2025.”
He noted that the decline doesn’t necessarily mean weaker demand for apartments but could be attributed to the market’s movement away from the huge post-COVID-19-pandemic construction wave.
According to an Oct. 20 analysis by the National Association of Home Builders, multifamily housing starts, including apartment buildings and condos, fell by 24.9 percent in September from the same month in 2025.
“Housing starts declined in September as high mortgage rates, persistent affordability challenges and rising construction costs held back home building,” association Chairman Bill Owens said.
“A sustained increase in home building is key to long-term affordability, but near-term construction depends on mortgage rates, financing conditions and efforts to ease regulatory barriers.”
According to Freddie Mac, as of Oct. 29, the average interest rate on a 30-year fixed-rate mortgage was 7.24 percent. Although it had declined for the second consecutive week, the rate remained more than 1 percentage point higher than the 6.17 percent at the same time in 2025.
Bucking the national trend, the Northeast will add more new rentals to the market than it did last year, with a total of 79,426 new units, RentCafe said.
The New York City metro is expected to bring in 38,825 new units. The report attributes the city’s multi-family construction growth to continued strong rent growth and years of underbuilding because of strict regulations and high costs.
The Northeast is overtaking the Midwest, accounting for a projected nearly 18 percent of the nation’s new apartment construction, compared with 12 percent. In total, the Midwest will add 53,484 apartments this year.
While new apartment construction throughout much of the country has declined, the report notes the South is still expected to supply 47 percent of the new apartments this year, comprising 208,085 units.
Florida and Texas lead the region with an estimated 56,394 and 50,392 new units, respectively.
RentCafe said steady population and employment growth continue to make the South an attractive destination for apartment developers. Growing populations, abundant developable land, and less restrictive regulations were also cited as factors contributing to multi-family building growth.
In addition to Texas and Florida, North Carolina and Georgia are ranked among the region’s top states for supplying new housing units.
The West, meanwhile, is gearing up to deliver 101,400 new rentals by the end of this year, comprising 23 percent of all new construction nationwide. California ranks first there with 38,201 new apartments.
Heading into 2027, RentCafe predicts the Northeast could continue to dominate new multi-family construction.
