{"id":874345,"date":"2025-08-12T06:14:41","date_gmt":"2025-08-12T10:14:41","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/tariffs-and-rising-construction-costs-could-signal-trouble-ahead-for-rents-despite-two-years-price-declines\/"},"modified":"2025-08-12T06:14:41","modified_gmt":"2025-08-12T10:14:41","slug":"tariffs-and-rising-construction-costs-could-signal-trouble-ahead-for-rents-despite-two-years-price-declines","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/tariffs-and-rising-construction-costs-could-signal-trouble-ahead-for-rents-despite-two-years-price-declines\/","title":{"rendered":"Tariffs and Rising Construction Costs Could Signal Trouble Ahead For Rents – Despite Two Years Price Declines"},"content":{"rendered":"
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PR Newswire<\/p>\n<\/p><\/div>\n

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\n The impact is being felt across the country as the Midwest saw the steepest annual drop in completions, followed by the South.<\/i>\n <\/p>\n

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\n AUSTIN, Texas<\/span>
\n <\/span>, Aug. 12, 2025<\/span><\/span> \/PRNewswire\/ — Rent prices declined for the 24th month in a row in July, marking a full two years of easing rental pressure in the U.S. rental market. At the same time, a growing pullback in multifamily development driven by rising construction costs and new tariffs on key materials like aluminum and steel is signaling potential trouble ahead for future rental supply, according to the\u00a0July Realtor.com<\/a>\u00ae<\/a><\/sup>\u00a0Monthly Rent Report<\/a><\/u>.<\/p>\n

The median asking rent for 0\u20132 bedroom properties in the 50 largest metros fell to $1,712<\/span> in July, a $43<\/span> (-2.5%) decline compared to the same time last year. While monthly rent growth continues to follow a typical seasonal pattern, it has consistently lagged behind last year’s pace, indicating a persistently cooler rental market. Rent prices remain $254<\/span> (17.4%) higher than their pre-pandemic levels, but are now $47<\/span> (-2.7%) below the peak reached in August 2022<\/span>.<\/p>\n

“Rents have now declined for two full years, giving renters more leverage and financial breathing room than they’ve had in some time,” said Danielle Hale<\/span>, Chief Economist at Realtor.com\u00ae<\/sup>. “But there are early signs that relief may not last forever. Developers are pulling back in key markets, and construction headwinds\u2014especially tariffs on steel, lumber and aluminum\u2014could create a shortfall in new rental supply down the line.”<\/p>\n

\n Multifamily Development Pulls Back Sharply
<\/b>In June 2025<\/span>, multifamily completions for buildings with two or more units fell 38.1% year-over-year, dropping from a seasonally adjusted annual rate of 656,000 units in June 2024<\/span> to just 406,000. This significant decline reflects the growing challenges facing developers, including elevated construction costs, shrinking profit margins due to lower rents, and newly expanded tariffs on imported building materials.<\/p>\n

The impact is being felt unevenly across the country. The Midwest saw the steepest annual drop in completions (\u201355.7%), followed by the South (\u201333.5%), Northeast (\u201333.0%), and West (\u201328.9%).<\/p>\n

\n Disrupted Local Permitting Trends with New Higher Tariffs Signals More Pull Backs Ahead
<\/b>Permitting trends across large metro areas show that some markets are already feeling the effects from higher construction costs and compressed profits:<\/p>\n