Greater Boston is facing a significant slowdown in housing production, as new home permits have drastically decreased over the past two years due to various economic pressures.
Recent data from the real estate firm Colliers reveals a concerning trend for the region: the share of housing inventory currently under construction has dipped to a level not seen in a decade.
This downturn signals not only a decline in new housing starts but also reflects the ongoing struggles of the local construction market.
Jeff Myers, the research director at Colliers, stated, “All of the economic factors that have slowed construction over the last two years are still impacting the market.”
He emphasized that while these challenges are not new, their cumulative effects are leading to fewer projects reaching the construction phase.
Following a surge in apartment permitting during 2021 and 2022, Greater Boston is now witnessing a dramatic decrease in housing production as the economy shifts away from its previous trajectory.
Two primary factors are contributing to this slowdown: escalating construction costs and rising interest rates.
Construction expenses soared during the pandemic and have yet to return to their pre-pandemic levels, significantly inflating the costs associated with building materials.
Simultaneously, the uptick in interest rates that began in early 2022 has made securing construction loans more expensive for developers.
Furthermore, investors who typically finance housing construction are now seeking higher returns, viewing housing projects as riskier investments in light of rising costs.
This new financial landscape means that builders must ensure their projects yield higher returns while managing increased costs for both materials and debt.
The ramifications are evident: as of the first quarter of 2025, just over 11,000 housing units were under construction in the Boston area.
This figure represents a striking 36 percent reduction compared to the peak of construction activity in the second quarter of 2022.
Many other projects have received permits but remain stalled due to difficulties in securing financing.
Developers are alarmed by these statistics, which suggest the region is nearing the end of the construction boom linked to the permits issued in 2021 and 2022.
With permitting levels dropping drastically since then, there are few projects on the horizon for the next couple of years.
The current pace of new unit permits remains unacceptably low in comparison to the region’s historical averages.
As of April 2025, only 3,022 new units were permitted in Greater Boston, a decline from 4,095 in 2024 and 5,920 in 2022.
This slowdown in housing development exacerbates the existing housing crunch in the area, leading to amplified demand and persistently high rents.
“We are still in a housing crunch,” Myers remarked, highlighting the ongoing challenges in meeting the considerable demand for housing within the region.
With economic challenges continuing to affect construction and permitting, the prospect for future housing availability looks increasingly uncertain.
image source from：https://www.bostonglobe.com/2025/05/30/business/boston-housing-construction-slowdown/
