The Coming Supply Reset and Why It’s Good News for Multifamily Investors

After years of record-breaking construction, the multifamily market is entering a turning point that should excite rather than alarm investors. 2025 will deliver one of the largest waves of new apartments in history, but it also marks the beginning of a rebalancing that sets the stage for stronger performance ahead. With development starts plummeting and national demand holding firm, the sector is moving toward its next period of sustained rent growth and value creation.

RealPage estimates roughly 576,700 new units will be completed by the end of the first quarter of 2025, just shy of the 2024 peak of 585,000. Deliveries are expected to fall to about 430,000 units by year-end, the start of a steady decline in new construction that will define the next cycle. Yardi Matrix confirms the same trend, with multifamily starts and permits down over 40 percent from their 2022 highs. This contraction is not a sign of weakness but a function of restraint: higher interest rates, elevated costs, and tighter underwriting have filtered out speculative development, leaving only projects with genuine long-term fundamentals.

The near-term result is an unprecedented normalization in supply. While the recent deluge of new product created temporary softness in a handful of metros, national absorption remains healthy, supported by population growth, household formation, and a resilient job market. As deliveries taper, demand will begin to catch up quickly. RealPage notes that in markets where new construction peaked earlier, rents have already started to accelerate again. With national rent growth forecast around 2.3 percent for 2025 and likely trending higher into 2026, the setup looks constructive for owners positioned to hold and operate through the transition.

This shift is particularly encouraging for mid-sized and affordable metros like Des Moines, where new construction has been measured rather than speculative. While gateway and Sun Belt markets wrestle with oversupply, Des Moines is poised to benefit from renewed balance. With fewer competing lease-ups, stabilized assets should see occupancy tighten, concessions fade, and pricing power return. Operators that maintained liquidity and disciplined expense control will be well-placed to capitalize on the next upward phase of the cycle.

The macro backdrop further supports the case. As financing costs stabilize and inflation moderates, capital will begin rotating back into multifamily, but with less product to chase, quality assets could appreciate quickly. Institutional and private buyers alike are already looking beyond short-term headlines toward the more favorable 2026-27 horizon, when the effects of this construction slowdown fully materialize. Historically, periods following sharp drops in new starts have produced some of the strongest total returns for multifamily investors.

In many ways, this “supply cliff” is exactly what the market needed. It relieves pressure on rent growth, restores equilibrium between supply and demand, and rewards operators focused on fundamentals rather than speculation. For investors with a longer time horizon, today’s environment offers the rare opportunity to enter or expand positions before the next growth leg begins.

Des Moines sits squarely in that sweet spot, affordable, growing, and insulated from the overbuilding seen in larger metros. As deliveries wind down nationwide, well-located assets in markets like this will capture the full benefit of tightening supply and steady demand. For disciplined owners, the next few years look less like a cliff and more like a runway toward renewed momentum.

(Sources: RealPage, “Apartment Supply Peaks in Early 2025”; Yardi Matrix, “Multifamily Forecast Q1 2025.”)