Key Takeaways
- Tariffs could to put rental price declines in jeopardy as building and construction costs increase, according to Realtor.com and Redfin.
- 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.
- A Redfin economist suggests that rental demand will rise due to more people opting not to buy during a time of economic uncertainty.
Tariffs could impact the rental market, experts say.
The median asking rental price in the 50 largest U.S. metros is now just $65 lower than the 2022 peak, sitting just shy of $1,700, according to Realtor.com. And while rents declined in March for the 20th consecutive month in part due to higher multi-family inventory, Realtor.com said, current prices are still higher than they were pre-pandemic, and tariffs may help bump them up even further.
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. Rising expenses may cut into construction plans, lifting rental prices, the report said.
“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 U.S. imports building materials from many countries, including highly tariffed ones like China. Nearly one quarter of America’s softwood lumber, for example, comes from Canada, according to the National Association of Home Builders.
People may choose not to buy during a time of economic uncertainty, according to Redfin Economics Research Lead Chen Zhao, driving further demand for rentals.
Leave a Reply