Getty Images
Takeaways
- According to Realtor.com and Redfin the rise in building and construction costs could lead to a rental price decline.
- Realtor.com's March Rent Report says markets with the fastest growth in permitted multi-family homes are expected to be hit hardest by steel and aluminum tariffs.
- Redfin’s economist believes that the rental market will increase as more people choose to rent rather than buy during this time of economic uncertainty.
Experts say that rental rates could be affected by tariffs.
According to Realtor.com the median rental price in 50 of the largest U.S. metros has fallen by just $65 from the peak in 2022. It is now just $1,700 shy. Rents fell in March for the twentieth consecutive month, in part because of a higher multi-family supply, Realtor.com reported. However, prices are still higher now than they were before the pandemic. Tariffs may also help to push them even higher.
Milwaukee, Oklahoma City, and Memphis—which saw the fastest growth in permitted multi-family homes last year—are expected to be hit hardest by steel and aluminum tariffs of 25%, due to anticipated higher construction costs, Realtor.com's March Rent Report said. The report says that rising costs may affect construction plans, which could lead to higher rental prices.
"We have seen declines in rents largely due to robust multi-family building and permitting adding more rental options in many metros," said Realor.com Senior Economist Joel Berner in a press release. "This tailwind is currently under threat as developers grapple with the short-term and long-term impacts of new and evolving tariffs on building materials. "
The United States imports building material from many countries including those with high tariffs like China. According to the National Association of Home Builders (NAHB), nearly one quarter of America’s softwood lumber comes from Canada.
Redfin Economics Research Director Chen Zhao says that people may choose to rent rather than buy in times of economic uncertainty.
