Here are the U.S. metro areas adding the most new apartments in 2023, in terms of supply expansion rate. And here are three "NOT surprises" -- and one maybe surprise -- about this list: 1) NOT surprisingly, it's a list dominated by the Sun Belt and Mountain regions. Only one market outside those regions (Sioux Falls, SD) cracked even the top 25. 2) NOT surprisingly, the highest-supplied markets cut rents. Of the 28 U.S. markets that expanded their apartment stock by more than 3.5% in 2023, 25 of them underperformed the U.S. average (0.3%) for year-over-year rent growth. Therefore, NOT surprisingly, there's a clear relationship between SUPPLY and RENTS. If you sincerely care about rental affordability, you should really care about building as many new rental homes (and not just apartments) as possible. Supply is the one and only proven solution to put downward pressure on pricing -- and the one solution that unites economists. These markets on the supply leaderboard also dominate the demand leaderboard for 2023. In fact, of these top 20 for supply, all of them ranked in the top 22 for net absorption last year. All of these markets are seeing strong demand. It's not a demand issue. But in 2023, there was even more supply than demand, and that's why rents dropped. After 2024, supply will drop -- and that will likely put upward pressure on rents again. But in the meantime, many of these same markets will see a similar story play out in 2024 as they saw in 2023. 4) If there's one actual surprise, it might be that Austin is the only Texas market in the top 20 (among the nation's 150 biggest metro areas) for supply expansion rate in 2023. Texas does build a lot, but in the big metros, the relative share isn't as significant as many analysts think. Supply expansion in 2023 measured 4.0% in Fort Worth, 3.0% in Dallas, 2.9% in San Antonio and 2.7% in Houston. That would put all but Fort Worth outside the top 35 nationally, and not dramatically above the U.S. average of 2.3%.
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