The number of new apartments is at a 50-year high, but states expect a slowdown

By Tim Henderson Stateline org More new apartments were built in than in any other year since but the Trump administration s tariffs and deportations of possible construction workers plus higher interest rates could be a wet blanket on the boom Related Articles Boston joins cities suing Trump administration over housing homelessness funds Sal s Pizza owner breaks ground on mixed use project with homes Buying an older vs new home might not be the answer to unaffordable housing Mark Zuckerberg s charity quietly cuts funding for affordable housing homelessness groups What does it cost to own a home in A U S Census Bureau survey determined almost new apartments were finished last year the the greater part since the s when baby boomers sparked a construction surge as they moved out of their childhood homes There were new apartments built in when the country had about half as a great number of households But there has been a steep slowdown in construction starts as the newly completed apartments come online The increased supply has lowered rents and increased vacancy rates making new expansion less profitable Particular experts also say tariffs on construction materials and labor shortages caused by dips in immigration will create headwinds for new construction Apartment starts were down in compared with and down from a latest peak of in despite the historic rate of completions Apartment starts were at their lowest ebb since Housing experts have long lamented that there aren t enough apartments and single-family houses in the U S at least not in places where people want to live and at prices they can afford Estimates of the national housing shortage last year varied widely from million houses and apartments to million since then another million houses and apartments have been built Largest part experts estimate a shortage of million to million according to the Joint Center for Housing Studies of Harvard University Selected states are building apartments faster than others according to a Stateline analysis Though completions aren t tracked by state permits that lead to new apartments have been granted at high rates in newest years in South Dakota Utah Arizona and Colorado Rates are lowest in Mississippi Wyoming West Virginia Rhode Island Oklahoma and Alaska The massive jump in apartment construction has its roots in and when interest rates were low and rent improvement was high explained Rob Warnock senior research associate for Apartment List a company that posts rental listings online Those new apartments came online in and and while those deliveries are slowing down currently there are still various apartments in the pipeline revealed Warnock who added that supply and demand are coming back into balance In response to greater supply rents have fallen by about per month from their peak according to a document disclosed last week by Apartment List Apartment vacancy is at a -year high of keeping a lid on rents but that could turn around as construction slows according to an April overview by Moody s a financial services company Apartment building has been a bipartisan priority as single-family home prices soar further out of the affordability range for young families In South Dakota the Republican-controlled legislature worked to prolong the building boom with grants and loans under the state s Housing Infrastructure Financing Plan The plan put million of state and federal funding toward defraying the costs of maturation in new neighborhoods such as roads sewer lines and streetlights Republican state Sen Casey Crabtree sponsor of the proposal signed into law in notified Stateline it was needed to address a housing shortage especially in rural parts of the state We have a drastic shortage of workers Crabtree commented before a vote in South Dakota businesses need more workers in our state To get more workers we need more housing Armand Domalewski co-founder of YIMBY Democrats for America explained overregulation is a barrier to housing construction in plenty of areas that his party controls A lot of blue-government areas and cities have extremely restrictive zoning impact fees and other rules that make it very demanding to build housing reported Domalewski Another barrier is local opposition he declared If it was just a free industry developers would want to build in the places like California where prices are the highest and rents are the highest because they d make more money he added In California the HOME Act was meant to spur more affordable housing and ease labor shortages but it s faced local opposition in particular areas At the end of last year Democratic Gov Gavin Newsom signed several measures that aim to streamline regulations and crack down on local resistance to the law South Dakota approved nearly permits for apartment units in and which when completed would add about to its total of housing units That s the highest rate in the nation By contrast Mississippi during that same period approved about apartment units a fraction of percentage point to its base of about million housing units Chas Olson executive director of the South Dakota Housing Expansion Authority reported the full impact of the state infrastructure funding isn t apparent yet as countless developments that received the help are still under construction Completions are still strong this year with about apartments finished in March not much different from the in March which was the biggest March number since Another impediment to apartment construction has been high interest rates which make it harder to borrow money to build announced Danushka Nanayakkara-Skillington an assistant vice president for forecasting and analysis at the National Association of Home Builders She expects apartment building starts to slow until later this year We are going to be short of workers for a long time That s the way it is And of syllabus tariffs are going to have an impact Nanayakkara-Skillington disclosed Stateline reporter Tim Henderson can be reached at thenderson stateline org States Newsroom Visit at stateline org Distributed by Tribune Content Agency LLC