U.S. multifamily construction starts during the first quarter of 2026 reached the lowest quarterly level since 2011, according to a new report from CoStar Group and Apartments.com. The quarterly update on nationwide construction activity has revealed the impact of costly construction and slowed rent growth on the U.S. market. Citing shrinking project feasibility, the report found that construction starts declined sharply last quarter to just 55,000 units nationwide –– a 73 percent dip from the previous peak achieved in early 2022. Completed apartments are still being absorbed by the market, particularly in Sun Belt metro areas that saw post-pandemic building booms. Annual delivery volumes nationwide are easing from their multi-decade highs in 2024, however, and have declined by about 26 percent over the past four quarters. “Developers have pulled back sharply as weaker rent growth and higher financing costs weigh on project feasibility,” Grant Montgomery, national director of U.S. multifamily analytics at CoStar, said in a statement. “While completions remain elevated for now, the contraction in the construction pipeline points to more balanced supply conditions ahead.” The current construction pipeline was similarly contracted. Roughly 579,000 multifamily units were in the works nationwide last quarter, in line with mid-2010 levels. Q1 marked a 50 percent dip in the pipeline from a high in early 2023, when multifamily units under construction hovered above 1 million. Apartment construction activity was unevenly distributed across the country. Ratios comparing under-construction supplies to existing supplies were highest in the Mountain and South regions, at roughly 3.3 percent and 3.2 percent, respectively. Southern metros such as Miami and Charlotte, N.C., saw the highest construction activity relative to existing units, with more than 6 percent of their respective housing stocks under construction in the first quarter. Meanwhile, development pipelines were far more constrained in the Northeast and Midwest regions, and as little as 1.9 percent of inventory was under construction in the Pacific region. New York City was the country’s busiest builder at the start of this year, with 43,000 units under construction, followed by the Dallas-Fort Worth area with 31,000 units. The broad slowdown in new starts and narrowing pipelines could eventually flip the script on supply pressure nationwide. If renter demand remains stable, fewer deliveries may mean tighter supplies, lower vacancies and a reversal in current concession activity. Emily Davis can be reached at edavis@commercialobserver.com.
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