Apartment owners hoping that new supply is finally fading will have to wait a little longer. Yardi Matrix has raised its 2026 forecast for multifamily completions by 4.8%, to 513,883 units from 490,362 in its third-quarter forecast.

That doesn’t mean the supply wave is starting over. The forecast shows deliveries dropping in 2027 and then climbing again in 2028, as a rebound in construction that began in early 2025 moves through the pipeline. For investors, that could mean a short break from new supply.

A Revision Driven By The Pipeline

Yardi Matrix said the near-term changes came mostly from under-construction and completion data, not from a different view of the overall market. More projects are finishing this year than expected.

The firm raised its forecast for every year through 2031, though most of the later changes are small. The 2027 forecast went up 1.5% to 450,964 units from 444,343. The 2028 forecast rose 1.9% to 464,242 from 455,442.

Because fewer buildings are nearing completion, Yardi Matrix expects 2027 supply to come in below this year’s level.

Further back in the pipeline, the trend is the opposite. Development in 2026 is running ahead of 2025, so more units are under construction but not yet in pre-lease. That count has been growing since late 2025, thanks to the rebound in national construction starts that began in early 2025 and is still going. Those projects are why Yardi Matrix expects 2028 supply to exceed 2027, at more than 464,000 units.

In markets Yardi Matrix has tracked for at least 24 months, the total under-construction pipeline ended the third quarter at 961,350 units. That’s up 1.6% from the prior quarter and 0.1% from a year earlier.

The longer-term rebound isn’t guaranteed. Development activity is still rising this year, but more slowly. Yardi Matrix said that if longer-term interest rates and inflation rise over the medium term, development could slow further.

The near-term forecast assumes the economy stays about where it is now and that backdrop has its own problems. Large federal deficits have held back income growth, employment and household formation. Spending on AI infrastructure and the ongoing war in Iran point to long-term interest rates staying high.

The Federal Reserve has raised the federal funds rate by only 25 basis points so far. Markets widely expect another 25-basis-point increase in December and the chances of another hike in early 2027 are growing.

Those increases affect the construction and bridge loans that developers and value-add buyers depend on. In markets with heavy supply and flat or falling rents, Yardi Matrix expects “continued reductions in market-rate supply.”

Market-Rate Product Leads The Decline

The drop from the peak falls mostly on conventional apartments. New supply peaked in 2024 at 696,281 units and Yardi Matrix expects it to fall to 450,964 units by 2027. Market-rate apartments account for most of that decline.

This year’s projected completions include 280,493 market-rate units, 68,053 mixed-income units, 89,674 fully affordable units, 10,353 senior units and 47,310 single-family rental units.

Affordable and mixed-income properties, which Yardi Matrix defines as having between 5% and 89% subsidized units, are declining more slowly. Affordable supply is expected to fall 13% from peak to trough, with mixed-income supply dropping 35%. That means subsidized and partly subsidized housing will make up a larger share of new deliveries over the next few years.

Where Construction Is Heaviest

The top 10 markets for under-construction units are mostly secondary and tertiary markets. Asheville leads at 15.80%, followed by the Southwest Florida Coast at 14.81%, Northwest Arkansas at 12.95%, Montana at 12.76% and Omaha at 11.35%.

The rest of the list is Miami at 10.38%, North Central Florida at 10.24%, South Dakota at 9.72%, Brooklyn at 9.56% and Wilmington at 9.29%. Florida has three markets on the list.