The multifamily housing market is experiencing a powerful shift across the U.S. and in regional hubs like Massachusetts. Demand for apartments and townhome-style rentals continues to climb — especially among younger renters seeking flexibility, convenience, and proximity to work and amenities.

Yet, even as more renters enter the market, new construction of multifamily units is slowing, raising long-term concerns about affordability and supply.

The Rising Demand for Multifamily Rentals

The pandemic years reshaped how Americans view housing. Many younger adults — including Millennials and Gen Z professionals — now prefer renting over buying due to:

• High mortgage rates and steep down payments

• Lifestyle flexibility to move for jobs or remote work

• Access to amenities like fitness centers, coworking spaces, and outdoor lounges

• Urban walkability and shorter commutes

In growing markets, including Greater Boston suburbs like Andover, North Andover, and Lawrence, the demand for modern multifamily rentals is outpacing supply. Developers have added new apartment communities and mixed-use projects, but population and job growth continue to apply pressure.

The Slowdown in Construction

Despite strong demand, multifamily construction starts are declining nationwide. Rising costs for labor, materials, and financing have delayed or canceled many planned developments.

According to industry data, new multifamily starts dropped significantly in 2024 and 2025 as developers faced:

• Higher interest rates and construction financing hurdles

• Persistent inflation in building materials

• Longer permitting and zoning approval timelines

• Difficulty securing land in desirable, transit-connected areas

This slowdown means fewer units will enter the market just as rental demand remains strong — creating a supply bottleneck that could intensify affordability challenges.

The Affordability Crunch Ahead

When supply lags behind demand, rents rise. Even as new luxury apartments open, the shortage of mid-market and affordable units is becoming more pronounced.

Younger renters — particularly recent graduates and early-career professionals — face limited options. Many are turning to shared housing or relocating to secondary markets with more attainable rents.

Without new multifamily construction to absorb growing demand, housing costs could climb faster than wage growth, pushing some households out of desirable metro areas entirely.

What This Means for Local Markets

Communities like Andover and North Andover sit at a crossroads of this trend. Their strong school systems, commuter access, and expanding business districts make them attractive for renters priced out of Boston proper.

However, without continued development of multifamily and mixed-use projects, these towns risk becoming less accessible to the very workforce that supports local businesses and economic growth.

Balancing smart growth policies with affordable rental development will be essential to maintaining diverse, sustainable communities.

The U.S. — and New England in particular — is facing a multifamily paradox: demand is surging while construction slows. For real estate professionals, investors, and local planners, the message is clear:

• Renters should anticipate tighter markets and rising costs.

• Developers may find new opportunities in mid-tier and workforce housing.

• Local leaders must consider incentives to keep projects moving forward.

Without renewed investment and policy innovation, the current boom in multifamily demand could become the foundation of a deeper housing affordability crisis.

Matt Witte strives to be the best realtor in North Andover, MA.

Any questions about real estate, reach out to Matt Witte, North Andover Realtor, MA-