Report: Houston led nation in apartment construction during first half of 2022

Houston residents might be noticing more and more apartments under construction in locales like Midtown, Montrose, Spring Branch and the Heights.

According to a blog that tracks apartment trends across the United States, more units were built in the city during the first half of this year than in any other place in the country.

Houston ranked first in the nation with 4,746 apartments constructed during the first six months of 2022, according to data released last month by RentCafe.com and first reported locally by Axios Houston. The city is projected to have 17,759 new units delivered for the calendar year, ranking fifth in the U.S. in that category and third in Texas behind Dallas and Austin.

“Companies like Hewlett Packard, NRG Energy, Roboze and Exxon Mobil Corp. continue to expand or relocate here, which continues to attract renters in search of good job opportunities in the city,” RentCafe wrote in its Sept. 8 report. “Consequently, Houston is working to meet the growing demand for housing.”

Bruce McClenny, the senior director of ApartmentData.com, a Houston-based market research firm, said the city’s status as the fourth-largest in the U.S. likely contributed to its high ranking in the RentCafe report. McClenny said he also projects the Houston region to have about 17,000 new apartments delivered during 2022, but he described that as a typical number for a metropolitan area that added about 20,000 units during each of the last two years.

Along with the aforementioned Houston neighborhoods as well as downtown, McClenny said new apartment construction is especially prevalent in suburbs such as Katy and the Conroe area.

“I’m not sure why we lead the nation when we’re just doing kind of what we’ve always done,” he said. “Houston’s a massive area that needs a lot of units.”

The RentCafe report said the construction of multifamily housing during the last two years is at a 50-year high nationally, with more than 423,000 apartments delivered last year and another 420,000 units expected to hit the market this year. The boom is “driven by pent-up demand for apartments nationwide, especially as some renters postpone their dream to become homeowners amid soaring inflation and rising interest rates,” according to RentCafe.

McClenny echoed that sentiment, saying the “demand for rentals is as high as it’s every been because the single-family market is in recession.” The price of single-family homes soared after the onset of the COVID-19 pandemic in 2020, when mortgage interest rates were low, and prices have continued to remain high while the federal reserve has raised interest rates to combat inflation.

More and more people are renting as a result, according to McClenny, who said that trend also has resulted in higher rental rates. His data shows the average monthly rent in the Houston area increased from $1,044 in October 2020 to $1,261 in September of this year.

“Rents are going up and will continue to go up as long as the single-family market has this problem of high interest rates,” McClenny said.