- New York City developers filed plans for just 8,064 new units in Q2 2026, less than half of what is needed to address the housing crisis, per REBNY.
- Developers are focusing on small-scale multifamily projects, with only nine out of 172 planned buildings containing 100 or more units.
- The scarcity of sites vested under the expired 421-a tax break and challenges with the new 485-x incentive are cooling the city’s once-robust development pipeline.
Fewer Incentives, Less Momentum
Developers in New York City pulled back sharply on new multifamily construction in the second quarter of 2026, according to the latest data from the Real Estate Board of New York (REBNY) reported by Bisnow. After a strong first quarter, filings for new apartment buildings dropped by 52% from spring to summer, totaling just 172 projects and 8,064 apartments from April to June. That’s less than half of the city’s stated monthly production target of 17,500 units needed to address its acute housing shortage. The expiration of the 421-a tax abatement and limited success of its replacement, 485-x, are major factors behind the decline.
This slowdown arrives while the city grapples with a 1.4% apartment vacancy rate and median Manhattan rents topping $5,000 per month as of July, signaling mounting affordability and supply pressures. The drop-off in development activity raises alarm for policymakers aiming to add 700,000 homes by 2036.
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The Details
REBNY reports that NYC developers proposed just 9.2M SF of new buildings in Q2 2026, a 56% decrease from the previous quarter. Most proposals (89%) were for multifamily, but nearly a fifth of that square footage comes from a single redevelopment project: Extell’s 1.6M SF supertall on the Upper West Side, transforming the former Disney campus. Only nine of the 172 buildings proposed included at least 100 apartments, leaving the lion’s share—153 projects—to add 99 or fewer units each. This trend toward smaller scale development has accelerated since wage requirements rose for larger projects under 485-x, which replaced the popular but now-expired 421-a incentive.
Developers Shift to Small Ball
The city’s construction pipeline now concentrates heavily below 100 units as developers seek to sidestep costlier 485-x wage mandates. This shift has already fueled a wave of 99-unit projects designed around the threshold for higher construction wages. REBNY’s data shows the pattern continued in Q1 2026, when over 90% of proposals had 99 units or fewer.
Despite attempts to design larger units, developers haven’t maintained the same total square footage. That means fewer apartments reach the market overall. Remaining 421-a sites are scarce, while tepid 485-x uptake makes larger new buildings increasingly rare.
Why It Matters
The ongoing drop in multifamily construction signals trouble for New York City’s efforts to build enough housing to catch up with its surging demand. The latest figures from REBNY demonstrate how reliant local development was on the 421-a program—which expired in June 2022, according to the New York Times—and how insufficient its successor, 485-x, has been in keeping shovels in the ground for large-scale housing. With only 8,064 units proposed in Q2 2026 against a monthly target of 17,500, the pipeline is falling dangerously short. Cushman & Wakefield research suggests that similar drop-offs in filings will ripple through the market for years, exacerbating the existing 1.4% vacancy rate and forcing rents even higher.
Affordable housing advocates expect inventory constraints to continue until either a new tax incentive gains traction with developers or construction wage costs become more manageable. The city’s strategy of asking for 700,000 new homes over the next decade is looking less feasible as major developers avoid larger projects and shift to more manageable, sub-100-unit apartment buildings. If this trend holds, the rental housing shortage will only intensify, pricing more New Yorkers out of the market.
What’s Next
Unless state lawmakers revise 485-x or introduce a new large-scale construction incentive, the city’s multifamily pipeline could remain hamstrung through 2027. With the pool of developable 421-a sites nearly depleted, future new housing will require either policy change or a significant adjustment from both the public and private sector. Several advocacy groups are pushing for further reforms this fall, but REBNY projects continued volatility and a muted pipeline unless incentives can close the delta between smaller and larger projects. Multifamily developers will likely stay focused on smaller projects until a more workable framework emerges.
