New Supply of Rental Housing Not Keeping Up with Demand

The National Multifamily Housing Council and the National Apartment Association released U.S. Apartment Demand – A Forward Look, which estimates the future national demand for rental housing through 2030. The report projects 141 million households in the U.S. by 2030, an increase of 16 million from 2016. Rental occupancy is projected to increase from 37.8% of households in 2016 to 39.5% in 2030. To meet this demand, 586,000 additional rental homes per year, including 328,000 apartments in multifamily structures, will be needed. Current construction, however, falls short of this need.

Several factors will increase the demand for rental housing. First, international immigration will exceed domestic population growth by 2023 if no changes are made to immigration policy, and immigrant households will likely enter the rental market. Second, young adults are marrying and having children later in life, delaying homeownership and increasing the number of single-person households. Third, as the large Baby Boomer generation ages, rental demand may increase because homeownership rates decline among seniors. Finally, homeownership is out of reach for many households because of tight mortgage credit standards and increasing student debt.

The authors estimated future demand for rental housing under three different scenarios. In the base scenario, the authors assumed current trends would continue, producing a need for 328,000 new apartments per year in multifamily buildings through 2030. In a scenario in which homeownership rates stabilize and slightly increase to match long-term averages, restrictive immigration policies decrease population growth, and household formation slows, 139,000 new apartments per year would be needed. In a scenario in which the homeownership rates decline even further and recent immigration levels are maintained, 517,000 new apartments per year would be needed.

U.S. Apartment Demand – A Forward Look can be found at: