In 2024, the U.S. saw its highest apartment construction rate since 1974, finishing nearly 592,000 units, fueled by a post-Baby Boomer demand. However, new construction starts have plummeted by 27% from the previous year due to tariffs, labor shortages caused by reduced immigration, and rising interest rates which are dampening profit margins. The increased supply has led to lower rents and higher vacancy rates, complicating the profitability of new projects. Experts estimate a continuing national housing shortage, with figures ranging between 1.5 million and 5.5 million units.
Despite a historic completion of 592,000 new apartments, construction starts have drastically declined, down 27% in 2024 compared to 2023, indicating potential future challenges for the housing market.
Tariffs on materials, labor shortages due to immigration dips, and soaring interest rates are posing significant challenges to the booming apartment construction sector.
The increase in new apartments has led to lower rents and higher vacancy rates, further complicating profitability and the sustainability of new developments.
Current estimates suggest a national housing shortage ranging from 1.5 million to 5.5 million units, highlighting the ongoing crisis in affordable housing.
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