U.S. apartment building permits drop significantly amid high costs

In the United States, developers obtained permits for the construction of 12.4 multifamily housing units for every 10,000 individuals over the past year, according to a report released on May 2, 2025, by Redfin, a technology-powered real estate brokerage. This figure marks a significant decline of 27.1% from the 17 units permitted per 10,000 people during the pandemic building boom and a 5.5% decrease from the 13.1 units permitted in the years leading up to the pandemic. The analysis drew upon data from the U.S. Census Bureau, specifically focusing on building permits for multifamily units within structures containing five or more units. In 2024, a record number of new apartments were completed, but now the market is seeing a stagnation in rent prices coupled with high borrowing costs, which are adversely affecting new construction projects. Sheharyar Bokhari, the Senior Economist at Redfin, noted that new apartments are being rented out at the slowest pace on record, prompting builders to reassess their commitments to new projects. High-interest rates have turned many construction ventures into financially burdensome undertakings. This slowdown in building activity may lead to an eventual reduction in the options available for renters, potentially resulting in increased rental prices in the future. Among major metropolitan areas, Austin leads in permitting new multifamily housing, with 64.5 units permitted for every 10,000 residents over the past year, despite the general trend of declining rents. Conversely, Stockton, California, posted the lowest activity by recording zero new permits, reflecting a dramatic decline of 100% from the previous year when it had 5.7 permits per 10,000 people. Overall, 63% of the analyzed metropolitan areas experienced a decline in the issuance of multifamily permits since the onset of the pandemic, with significant drops noted in places like Colorado Springs, Boise City, Minneapolis, and Jacksonville. However, some cities saw a resurgence in permit approvals, significantly increasing their multifamily housing options. For example, Oklahoma City led the gainers with a 193% increase in permits, followed by cities such as Pittsburgh and Hartford, which also posted impressive growth rates. These statistics underscore the volatility in the housing development landscape across the United States as market conditions evolve differently across regions.