May 31, 2025

Housing Construction in Greater Boston Hits 10-Year Low

News Summary

The Greater Boston housing construction market has dropped to a decade low, with permits for new homes significantly declining. Rising construction costs and high interest rates are major factors slowing down development. In Q1 2025, the number of housing units under construction fell to a low of over 11,000, a decrease of 36% from its peak in mid-2022. With only 3,022 new units permitted in early 2025, the ongoing housing shortage is expected to exacerbate rental prices in the region.

Boston

The housing construction landscape in Greater Boston has reached a significant low, with new home permitted numbers plummeting due to ongoing economic challenges. In the first quarter of 2025, the share of housing inventory under construction has fallen to a 10-year low, as reported by the real estate firm Colliers. This downward trend indicates a stark contrast to the robust construction pace witnessed in the past decade, signaling potential repercussions for housing availability in the region.

The decline in housing production follows a peak in 2021 and 2022, with a notable drop in new projects as economic factors remain influential. The research director at Colliers indicated that the existing economic environment continues to hinder the initiation of new construction projects, resulting in a severe slowdown in housing development.

Key Factors Behind the Decline

At the heart of this slowdown are rising construction costs and increasing interest rates, which have significantly altered the financial landscape for developers. Since early 2022, elevated interest rates have increased the costs for obtaining construction loans, making financing less accessible for potential housing projects.

Moreover, the surge in construction material costs during the pandemic has not reverted to pre-pandemic levels, further straining developers’ budgets. Consequently, investors are demanding higher returns in light of perceived risks associated with housing developments, complicating the financing options for new construction.

Current Status of Housing Units

As of the end of the first quarter of 2025, Greater Boston has just over 11,000 housing units actively under construction, a decline of approximately 36% from the peak observed in the second quarter of 2022. Although numerous projects have been permitted, many of them are stalled and yet to commence due to difficulties in securing necessary financing.

The number of new housing units permitted in Greater Boston during 2025 has remained alarmingly low, standing significantly below the historical averages. In the first four months of 2025, only 3,022 new housing units were permitted, a decrease from 4,095 units in 2024 and 5,920 units in 2022. This sharp decline reflects ongoing challenges in the housing market, intensifying the demand for available units.

Implications for Housing Market

The limited construction of new housing units continues to exacerbate an already critical housing shortage, keeping rent levels high throughout Greater Boston. With demand persisting and new supply dwindling, renters face sustained pressure on monthly pricing.

Despite the substantial housing inventory under construction, the challenges of financing new projects signal a prolonged period of housing crunch, with pressures likely to continue as economic factors remain fixed. This situation calls for measures to address both financing and development challenges to facilitate housing production in the region.

As Greater Boston navigates these economic impediments, it is crucial for stakeholders and policymakers to understand the implications of this slowdown and assess potential strategies to alleviate the housing challenges faced by current and future residents.

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Additional Resources

Author: STAFF HERE BOSTON WRITER

BOSTON STAFF WRITER The BOSTON STAFF WRITER represents the experienced team at HEREBoston.com, your go-to source for actionable local news and information in Boston, Suffolk County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Boston Marathon, Head of the Charles Regatta, and Boston Harborfest. Our coverage extends to key organizations like the Greater Boston Chamber of Commerce and Associated Industries of Massachusetts, plus leading businesses in finance, biotech, and insurance that power the local economy such as Fidelity Investments, Biogen, and Liberty Mutual Insurance. As part of the broader HERE network, we provide comprehensive, credible insights into Massachusetts's dynamic landscape.

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