Apartment construction across the country is down this year, according to a new report released by apartment search website RENTCafé.
Rental construction in the U.S., already on a downward trend since the 2018 peak in construction, has been further exacerbated by COVID-19, the report said. A little over 280,000 new rental apartments (large-scale buildings of 50 units or more) are expected to be completed this year, a drop of 12% compared to a year ago.
In addition, more than half of developers polled reported significant delays in construction due to the pandemic, as well as a drop in new projects.
“As the United States begins to recover from its steepest economic downturn in history, the construction industry is faced with unprecedented levels of uncertainty,” said Doug Ressler, manager of business intelligent at RENTCafé sister company Yardi Matrix in the report. “How that uncertainty and broader macroeconomic conditions will affect the industry to date, and the shape of the recovery to come depends on multiple factors.”
The study looked at the top 20 metro areas, 13 of which are projected to build fewer units than last year. The projected data places 2020 at the lowest in five years.
Apartment construction in Miami dropped by 53% in 2020, the biggest drop of any city on the list. Only 5,840 new apartment units are expected to be delivered in 2020, significantly lower than last year’s 12,533. However, the report noted that Miami has had four consecutive years of highly active apartment construction, totaling more than 50,000 new units between 2016 and 2020.
With an affordable housing crisis looming and inventory shortages in the for-sale sector, a drop in apartment construction could be potentially devastating, but the report expects construction activity will pick up.
“Construction starts have begun to increase from their April lows and there is cautious optimism that as the year progresses construction markets around the country will begin a modest recovery,” Ressler added.