A simple reason it's getting harder to build rental housing

"The cost rose a lot following the pandemic. And some of that was supply chain issues that really increased the costs, and then they didn't quite come back down. And now tariffs are also impacting some products. These costs are part of the reason the amount of new rental housing stock is shrinking."

"According to a new report from the Joint Center for Housing Studies of Harvard University, construction material costs have skyrocketed in recent years, adding to a wide range of conditions that are slowing the production of rental housing. There was a 42% increase in the overall material costs of multifamily residential construction over the five-year period from 2020 to 2025."

"Five major categories of building materials-gypsum, plastic construction products, lumber and wood, ready-mix concrete, and brick and structural clay tile-have experienced cost increases of between 26% and 47%. The high material costs have contributed to the slowdown in overall rental housing production."

Rental housing construction in the United States is slowing due to dramatically increased construction material costs. A Harvard Joint Center for Housing Studies report reveals material costs rose 42% between 2020 and 2025, compared to only 7% growth in the previous five-year period. Major building materials including gypsum board, concrete, and lumber experienced cost increases between 26% and 47%. Post-pandemic supply chain disruptions and current tariffs have prevented prices from declining. Consequently, multifamily housing starts dropped from a 30-year high of 547,000 units in 2022 to 416,000 in 2025, with fourth-quarter starts declining 36% year-over-year.

Read at Fast Company