Builders pulled permits for new apartment buildings at a seasonally adjusted annual rate of 490,000 units in July, according to the Census Bureau and HUD’s joint construction report, down roughly 31% from where multifamily permitting stood at its 2022 peak. That’s a federal number, not a real estate company’s estimate, and it points at what the rental market will look like two years from now more than any single month’s rent figure does.
Permits are a leading indicator, not a snapshot of what’s available today. A building permitted this month typically doesn’t deliver finished, move-in-ready units for another 18 to 24 months, which means the apartment supply renters will be choosing from in 2027 and 2028 is already being shaped by decisions builders are making, or not making, right now.
490,000 units a year, measured by the government, not a listing site
The Census Bureau and HUD’s July New Residential Construction report put total housing permits at a seasonally adjusted annual rate of 1,443,000 units, of which 894,000 were single-family homes and 490,000 were in buildings with five units or more, the government’s own definition of apartment-scale construction. That 490,000 figure is the preliminary reading; the Federal Reserve Bank of St. Louis, which republishes the same Census series, has that number at 482,000 once August revisions are folded in, a small enough difference that it doesn’t change the picture. Either way, multifamily permitting is running far below where it stood at its 2022 peak, when it was closer to 700,000 units annually as builders raced to meet post-pandemic rental demand.
The decline shows up just as clearly in the not-seasonally-adjusted version of the same Census data, which came in at 43,200 units in July, part of a multi-year slide from the elevated readings recorded throughout 2022 and early 2023. Multifamily housing starts, which typically follow permits by several months as projects move from paperwork to groundbreaking, have fallen even further, down to a seasonally adjusted 421,000 units in July.
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Why builders pulled back after building so much
The pullback isn’t a mystery. Developers who permitted hundreds of thousands of apartment units in 2022 are now watching those buildings lease up slowly in markets where concessions are common and rent growth on apartments has been soft, running at just 1.7% annually as of July according to Zillow. Building costs, land prices and financing costs have all stayed elevated at the same time rents were cooling, which squeezed the returns on new multifamily projects and made builders more cautious about starting the next one.
That caution compounds through the pipeline. Fewer permits this year means fewer construction starts next year, and fewer finished buildings the year after that, with each stage narrowing the one behind it rather than the slowdown showing up all at once.
What a renter signing a lease today is actually locking in
A renter signing a 12-month lease this fall is, in effect, locking in the cheap end of a supply cycle. The apartment options available right now, including the roughly 40% of listings still carrying a concession, reflect a wave of construction that was mostly permitted back in 2021 and 2022 and has spent the past two years delivering finished units. The pipeline behind that wave is measurably thinner today, and if permitting stays near 490,000 units a year, the supply of new apartments hitting the market in 2027 and 2028 will be meaningfully smaller than what hit the market in 2024 and 2025.
That doesn’t mean rents are about to spike. Zillow’s own forecast still expects multifamily rent growth of around 1.9% for the full year, below the long-run historical average. But it does mean the conditions that produced today’s deals, an oversupply of newly built units competing for tenants, are not something a renter can safely assume will still be there when the current lease comes up for renewal in a year or two.
The completions pipeline is still finishing, for now
One reason the drop in permits hasn’t yet translated into a shortage is that a backlog of previously authorized apartments is still working its way to completion. The same Census report puts multifamily completions at a seasonally adjusted annual rate of 329,000 units in July, and units authorized but not yet started stood at 666,000, both figures reflecting the large batch of projects greenlit during the 2022 boom that are still moving through construction. That backlog is what’s keeping vacancy up and concessions common in the near term, even as the newer permit numbers point toward a thinner pipeline once it clears.
Where the drop-off is sharpest
The Census permit data is broken out by region, and the South, which accounted for the largest share of the 2022 apartment boom in fast-growing metros like Charlotte, Dallas and Austin, is also where the pullback in new authorizations has been most pronounced relative to that earlier peak. Those same metros are the ones showing the highest concession rates today, at 68.1% of listings in Charlotte and 65.6% in Dallas, a reminder that the current glut and the coming shortage are two stages of the same regional building cycle rather than separate, unrelated stories playing out at the same time.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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