A Historic Gap Between Demand and Development

As we reach the mid-point of 2025, one of the most striking trends in U.S. multifamily is the growing disconnect between apartment demand and new development starts. The numbers tell a story we haven’t seen in over a decade—and for long-term investors and developers, it’s an inflection point worth paying attention to.

In the 12 months ending Q1 2025, just over 209,000 new market-rate units broke ground across the country. That’s nearly 100,000 units below the decade-long annual average of 307,300, and a staggering drop from the peak of 587,000 starts back in late 2022. Construction starts have now declined for ten consecutive quarters, the result of high financing costs, tighter capital markets, and ongoing uncertainty around interest rates and regulatory pressures.

Meanwhile, demand is moving in the opposite direction—fast. U.S. apartment absorption hit an all-time high of nearly 708,000 units leased in the same period, driven by easing inflation, strong job growth, and a wave of new household formation. That’s 3.4 times more units absorbed than started, the highest ratio we've seen since 2010.

Why it matters:This supply-demand imbalance isn’t just a statistical anomaly—it’s a clear signal that a tightening market is on the horizon. Rent growth is likely to accelerate in undersupplied metros, and the window to capitalize on that trend is closing for those waiting on the sidelines.

At DanReDev, we’re leaning into this moment. We’re pursuing selective ground-up opportunities in markets with strong fundamentals, limited competition in the pipeline, and clear signs of pricing power returning to landlords.

We see this as a builder’s market—but only for those who can move quickly, manage risk, and bring patient capital to the table.

To learn more about our active pipeline and investment strategy, visit www.danredevllc.com or reach out directly.