The average rental price across America's 50 largest metropolitan areas is a mere $65 below the 2022 peak, now around $1,700, as shared by Realtor.com. Despite a decrease in rents in March due to increased multi-family housing availability, this marked the 20th month in a row of decline, the current rental rates are still higher than before the pandemic. Moreover, tariffs could potentially escalate them.
Cities such as Milwaukee, Oklahoma City, and Memphis, which saw the most rapid expansion in multi-family home permits last year, might feel the most impact from 25% steel and aluminum tariffs. The probable increase in construction expenses might pose a threat to their building plans, further pushing up rental prices, as indicated in Realtor.com's March Rent Report.
Joel Berner, Senior Economist at Realtor.com, explained that rent decreases have mainly occurred due to the growth in multi-family buildings and permits, which increased rental choices. However, this positive trend is now endangered as developers confront the immediate and long-term effects of newly applied and shifting tariffs on materials for building.
The US imports a significant amount of its building materials from highly tariffed countries like China, with almost 25% of American softwood lumber coming from Canada, the National Association of Home Builders states. Economic uncertainty could deter people from purchasing homes, increasing the demand for rentals even further, according to Chen Zhao, the Lead of Economic Research at Redfin.