By Anca Gagiuc
This past year proved unpredictable not just for those acting in the investment market, but for developers as well. Inflation woes cast a shadow on the multifamily construction market, as the cost of capital is still rising. However, the severely undersupplied housing stock offers a strong proposition to developers dealing with construction costs, at least in some parts of the U.S., Yardi Matrix development data shows, based on its coverage of all multifamily properties of 50-plus units across 140 markets. To see which markets were most resilient to rising inflation and interest rates from a development standpoint, we focused on construction starts-related data in 2022.
Nationally, the total volume of construction starts in 2022 through the third quarter amounted to 363,575 units—one-third of the total number of units under construction at that time—and just 3.2 percent below the figure recorded during the same interval last year (375,756 units), a year that ended with nearly half a million units breaking ground across the country, more than in any prior year. Lifestyle properties dominated the pipeline, accounting for 80 percent of the projects that broke ground during the first three quarters of the year.
There were roughly 1.1 million units under construction across the U.S. as of the third quarter of 2022, 7.4 percent of existing stock. Moreover, the data reveals a steep decline in the number of deliveries as some 271,000 units were added to the inventory in 2022 through the end of the third quarter. That accounts for 1.8 percent of total stock, trailing the 318,449 units added to the inventory in 2021 during the same interval.
