What a 29% Drop in Apartment Starts Could Mean for Phoenix Housing

Multifamily developers across the Phoenix metro are quietly positioning for the next phase of the cycle. While construction activity has slowed, land acquisitions are accelerating — a signal that developers are underwriting to a future supply gap, not today’s market.

According to reporting by Phoenix Business Journal, traditional apartment construction in Phoenix is down 29% year-over-year, with total units under construction well below the 2023 peak. That slowdown is expected to thin the development pipeline heading into 2027–2028.

Why Developers Are Buying Land Now

The strategy is timing, not speculation.

By acquiring land today, developers can launch projects that deliver after the current supply wave has been absorbed. Higher interest rates, tighter capital markets, and softer rents have pushed many starts to the sidelines — creating the conditions for fewer competitive deliveries two years out.

Several recent land deals across the metro reflect this approach, with projects targeting delivery windows in 2027 when new supply is expected to be materially lower.

What This Means for Multifamily Investors

For investors, the reset carries clear implications:

• Existing assets may benefit first as new deliveries slow

• Development risk is shifting earlier in the cycle, favoring patient capital

• Build-to-rent continues to address a structural affordability gap, supporting long-term demand

With homeownership still significantly more expensive than renting, demand for well-located multifamily and BTR housing remains intact.

The Bottom Line

Phoenix multifamily isn’t contracting — it’s rebalancing.

Construction starts are slowing, land is being banked, and developers are preparing for a market where new supply is no longer guaranteed. For investors, the next phase will reward timing, discipline, and staying power, with 2027 shaping up as a very different landscape than today.