Development plateaus amid challenges similar to those facing the market rate sector
SANTA BARBARA, Calif., June 17, 2026 – Decelerating U.S. affordable housing starts will result in a decline in deliveries over the next two years as a host of challenges confront the market, according to a new national report from Yardi® Matrix.
Fully affordable housing starts increased every year for more than a decade, totaling nearly 95,000 in 2023 before falling to about 85,700 in 2024 and 81,200 in 2025. Fully affordable starts dropped almost 20% year-over-year in Q1 2026.
Deliveries of fully affordable apartments, which peaked at nearly 100,000 in 2024, will total more than 90,400 in 2026 before declining to about 71,000 next year.
Yardi Matrix attributes the erosion of starts to rising construction costs, elevated interest rates, labor shortages and declining tax credit pricing; these conditions also affect market rate housing development. Many affordable housing projects also “require additional subsidies, more complex capital stacks or longer timelines to move forward,” the new report states.
Furthermore, regulatory and entitlement constraints, plus extended approval timelines in many high-cost markets along with funding and allocation process uncertainty, “limit the pace at which new projects can enter the pipeline.” It remains to be seen whether the market conditions that have stunted starts will offset legislative initiatives to reduce barriers to affordable housing construction.
Deliveries over the next few years will be concentrated in primary metros with significant demand and high-growth Sun Belt markets. These include Los Angeles; New York City; Austin, Texas; Dallas; Miami Metro; San Francisco; and Denver.
Get more insight in the Yardi Matrix Affordable Housing National Report for June 2026.
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