{"id":4943,"date":"2026-01-13T12:22:50","date_gmt":"2026-01-13T12:22:50","guid":{"rendered":"https:\/\/marketsfortress.com\/index.php\/2026\/01\/13\/even-as-rent-falls-in-many-u-s-cities-a-supply-crunch-could-be-on-the-horizon\/"},"modified":"2026-01-13T12:22:50","modified_gmt":"2026-01-13T12:22:50","slug":"even-as-rent-falls-in-many-u-s-cities-a-supply-crunch-could-be-on-the-horizon","status":"publish","type":"post","link":"https:\/\/marketsfortress.com\/index.php\/2026\/01\/13\/even-as-rent-falls-in-many-u-s-cities-a-supply-crunch-could-be-on-the-horizon\/","title":{"rendered":"Even as rent falls in many U.S. cities, a supply crunch could be on the horizon"},"content":{"rendered":"

Renters in the U.S. found some relief in 2025 as a surge of newly finished apartments<\/a> in many parts of the country led to cheaper rent.<\/p>\n

It\u2019s a trend that could reverse in 2026.<\/p>\n

<\/div>\n

Data released Friday shows the construction of new apartments has dropped off in the last year, spelling potential trouble for renters as the number of available properties stagnates and macroeconomic pressures keep more people in the rental market.<\/p>\n

It\u2019s a shift that experts say could indicate the start of a challenging cycle for renters.<\/p>\n

\u201cFewer housing projects are being started and fewer are being completed, which goes to show that the pandemic building boom is over,\u201d said Daryl Fairweather, the chief economist for real estate brokerage Redfin. \u201cThis will limit inventory of both homes for sale and rent moving forward, which will exacerbate the housing shortage.\u201d<\/p>\n

According to October data<\/a> released Friday from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, two major indicators of residential apartment construction activity saw a year-over-year decline.<\/p>\n

Starts, which measures the launch of construction, saw a nearly 11% drop in activity compared to October 2024. This means there are fewer apartments being built now than in the year prior.<\/p>\n

Another important indicator is the number of completed builds. October data shows completions declined nearly 42% compared to the year prior, meaning there are fewer newly constructed apartments ready to enter the market now than there were in 2024.<\/p>\n

However, the data also showed a pickup in permits authorizing new apartment construction \u2014 meaning builders have new projects lined up.<\/p>\n

It can take more than a year and a half to get a building completed once a permit is issued, according to Robert Dietz, the National Association of Home Builders\u2019 chief economist. So although there is an uptick in permits for new construction, that is unlikely to immediately translate into a jump in completed projects in 2026.<\/p>\n

Following a huge boom in completed projects in 2024, the data shows, homebuilders didn\u2019t push forward on as many new projects in 2025. While there is still a surplus of supply<\/a> and builders are gearing up to start new builds, the decline in starts and completions means there will likely be fewer new builds hitting the market in 2026.<\/p>\n

Part of this decline in construction activity can be attributed to the financial strain homebuilders have been feeling from higher interest rates, wages, fees and material costs, which in turn makes building more expensive, both experts said. However, this was mainly a barrier for larger metropolitan rental markets that are more heavily populated.<\/p>\n

Due to lower construction costs and zoning laws, construction actually increased in smaller towns and secondary cities in less dense areas of the country \u2014 like the Sunbelt and the Midwest, according to Dietz and Fairweather.<\/p>\n

\u201cIt\u2019s cheaper to build in those areas, [but] it may be the last leg of some of the work from home,\u201d Dietz said. \u201cIn fact, as work from home has been replaced with return to the office, we\u2019re likely to see rental demand increase in the inner suburbs and the central counties just due to commuting costs.\u201d<\/p>\n

Many of these areas saw a decline in rental costs, too.<\/p>\n

According to Realtor.com data for November<\/a>, the national average rent across the 50 biggest metropolitan areas in the U.S. dropped 1% from the year prior.<\/p>\n

Metro areas like Austin, Texas, and Denver saw some of the bigger rent cuts, while denser metro regions \u2014 like New York, Washington, D.C., Chicago and San Francisco \u2014 either saw no change or some rent growth, according to the data.<\/p>\n

For renters in some of these denser areas, competition might be steeper this coming year, Fairweather noted.<\/p>\n

Overall, she said she thinks there will be \u201cmore demand for apartments,\u201d which in turn will \u201cput some pressure on prices because supply is likely not going to improve.\u201d<\/p>\n

Also contributing to this increase in competition is the fact that fewer people are buying homes due to high costs, keeping them on the rental market, Fairweather said in an article she co-authored detailing Redfin\u2019s 2026 housing predictions<\/a>.<\/p>\n

Dietz said the \u201chousing affordability crisis manifests itself both in terms of frustrated prospective homebuyers who rent longer as well as households who do not form, which means young adults living with their parents and then also doubling and tripling up with roommates.\u201d<\/p>\n

Fairweather echoed this view, saying she expects \u201cmore intergenerational living arrangements or roommate living arrangements.\u201d<\/p>\n

While the 2024 surge has left some inventory still on the market, and the increase in permits means there will be more construction down the road, in the meantime, renters could be left with a gap in new supply once the available units run out \u2014 pushing them to cough up more cash in more competitive rental markets, or come up with alternative living arrangements.<\/p>\n

And looking ahead, Dietz said he expects apartment construction to be \u201crelatively flat\u201d in 2026.<\/p>\n","protected":false},"excerpt":{"rendered":"

Renters in the U.S. found some relief in 2025 as a surge of newly finished apartments in many parts of the country led to cheaper rent. It\u2019s a trend that could reverse in 2026. Data released Friday shows the construction of new apartments has dropped off in the last year, spelling potential trouble for renters <\/p>\n","protected":false},"author":0,"featured_media":4944,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":{"0":"post-4943","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"_links":{"self":[{"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/posts\/4943","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/comments?post=4943"}],"version-history":[{"count":0,"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/posts\/4943\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/media\/4944"}],"wp:attachment":[{"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/media?parent=4943"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/categories?post=4943"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/marketsfortress.com\/index.php\/wp-json\/wp\/v2\/tags?post=4943"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}