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Increased number of apartments under construction leads to lower house prices rent Prices have increased in parts of the country, but this relief may end in 2026.
Realtor.com data In November, average rents in the country’s 50 largest metropolitan areas fell 1% year-over-year.
Urban areas like Austin and Denver reported some larger rent cuts, while denser metropolitan areas like New York, Washington, D.C., Chicago, and San Francisco reported no or no changes in rent prices. higher price.
While rents are falling for some Americans It’s undoubtedly a reliefit is likely to be short-lived.
Data released Friday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development showed new apartment construction fell last year. With fewer new apartments on the market, demand for units may increase, allowing management companies to raise rents.
Daryl Fairweather, chief economist at Redfin told NBC News By 2026, renters may have a hard time finding an affordable apartment.
“Fewer housing projects are starting and fewer are being completed, suggesting the pandemic building boom is over,” he told the broadcaster. “This will limit the stock of homes for sale and rent in the future, exacerbating the housing shortage.”
The data, compiled in October but released on Friday, showed residential apartment construction fell year-on-year.
Since October 2024, the number of new apartment construction projects has dropped 11%. It also found that project completions were down nearly 42% compared with October 2024.
It’s not all bad news. The data also found an increase in the number of permits authorizing new apartment construction, suggesting more projects are underway even if they haven’t started yet.
Robert Dietz, chief economist for the National Association of Home Builders, told NBC News that a construction project can take more than a year and a half from the permitting stage to completion. Many projects not currently underway are unlikely to be completed by 2026.
A decline in new construction is the latest symptom of this trend The nation’s ongoing affordability crisis. Homebuilders face higher interest rates, higher wages, higher construction fees and higher material costs. Increased costs make construction projects more expensive.
These pressures are more pronounced in densely populated urban environments. Construction increased last year in smaller towns and less densely populated cities such as the Midwest and Sun Belt.
Apartment construction has increased in many less populated areas, but rental prices have also declined.
Affordability is also a concern for homebuyers. Housing costs are forcing many people who might otherwise choose to buy into the rental market, putting pressure on available housing stock and driving up rental costs.
Dietz told NBC News that “the housing affordability crisis is not only reflected in frustrated potential homebuyers renting longer, but also in the inability to start families, which means young people are living with their parents and then roommates.”