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15,000 Fewer Rental Units Were Completed in 2019 Than in 2017

George Boyd

The number of rental apartments completed in the United States in 2019 remained statistically unchanged from the previous year but dropped by 15,000 from 2017.

We looked at the characteristics of newly constructed apartments spanning 2015 to 2019, including the number of units, percentage rented in the first three months after being completed, and the median rents — both nationally and by regions.

The South accounts for 38% of the total U.S. population but 43% of new rental unit construction — the highest percentage of new construction of any region in 2019.

During that period, monthly rents were about $100 higher than in 2015, even after adjusting for inflation.

The information comes from the Survey of Market Absorption of New and Multifamily Units (SOMA). The publication is a valuable tool for builders, bankers, market analysts, land planners, and government officials to measure how soon housing units are rented or sold (absorbed) after their completion.

SOMA provides a key metric for gauging demand for new units. The survey collects data for privately financed, nonsubsidized, unfurnished units in buildings with five or more units, and data is published quarterly by the Census Bureau.

Highlights from 2015 to 2019:

  • The highest number of rental apartment construction in the United States in the past five years was in 2017, when 294,800 units were built.
  • The South continued to lead the nation in new apartment construction in 2019.
  • Nationally, the median monthly cost to rent an apartment in 2019 was $1,653. That was about $100 higher than the median monthly rental costs of $1,519 in 2015, after adjusting for inflation.
  • The absorption rate – the percent of apartment units rented nationally within three months of completion – in 2019 was lower than in 2015. It remained statistically unchanged from 2017 to 2018.
 

 

While the West saw an increase of more than 7,000 new units in 2019 from the previous year, the South saw a decline of just under 5,000 new units, while the Northeast and Midwest remained statistically unchanged.

  • The South accounts for 38% of the total U.S. population but 43% of new rental unit construction — the highest percentage of new construction of any region in 2019. It was followed by the West, which accounted for 30% of new rental unit construction, and the Midwest at 14%.
  • The Northeast accounted for 17% of the total population in 2019 and had the lowest percentage of new construction at 13%.
 

 

There were approximately 1,387,000 new apartment units in buildings with five or more units constructed nationwide between 2015 and 2019.

Fifty-six percent of the new apartment units constructed between 2015 and 2019 were absorbed (rented) within the first six months on the market. After 1 year, 94% of those units were rented.

During that period, the largest number of new units were built in the South. The peak year was 2017 when 138,900 apartments were built — more than the number built in each of the previous two years and 18,500 more than were built in 2019.

The South took the lead in the number of new apartments built but not in rental costs. Median monthly rent in 2019 was highest in the Northeast at $2,279. The West had the second highest median rent at $1,903, followed by the South ($1,476), and the Midwest ($1,381), which did not differ significantly from each other.

 

 

George Boyd is a former survey statistician with the Financial and Market Characteristics Branch in the Social, Economic, and Housing Statistics Division. He recently retired.

 

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