Uncertainty surrounding newly imposed tariffs on imported steel and aluminum is casting a shadow over the U.S. rental market, particularly in cities where multifamily construction has been booming. These duties, set at 25%, threaten to drive up construction costs, potentially stalling or even halting new apartment projects in markets that have seen the fastest growth in permitted multifamily homes, according to a report from Realtor.com.
Cities such as Milwaukee, Oklahoma City, and Memphis are expected to be hit hardest, with developers likely to reconsider or delay projects as expenses rise. The resulting slowdown in new supply could ultimately be passed on to renters, reversing the recent trend of declining rents and pushing prices higher in these high-growth areas.
This potential shift comes when renters have been enjoying some relief. March 2025 marked the 20th consecutive month of year-over-year rent declines, with the median asking rent in the 50 largest metropolitan areas dropping to $1,694—a decrease of $20, or 1.2%, from a year ago. This figure stands at $65, or 3.7%, below the peak recorded in August 2022. The primary driver behind this downward trend has been a surge of new multifamily homes entering the market.
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Every apartment size category has seen rent declines over the past year, with studios down 1.2%, one-bedrooms down 1.1%, and two-bedrooms dropping 1.4%. Despite these recent dips, rents remain significantly higher than before the pandemic. Since March 2019, the median rent has risen 20.2%, from $1,409 to $1,694. Only San Francisco’s median asking rent remains below the pre-pandemic level. Other markets have seen dramatic increases, with Pittsburgh leading the Northeast at 47.9% growth, Tampa topping the South at 45.7%, Indianapolis leading the Midwest at 34%, and Sacramento in the West at 30.6%.
The recent month-over-month uptick of $4 in rents for March aligns with typical seasonal patterns, but the broader trend has been one of easing prices—until now. The threat of tariffs is poised to disrupt this balance.
The risk is especially acute in markets where multifamily permitting has surged, such as Milwaukee (up 101.3% over the five-year average), Oklahoma City (up 90.4%), and Memphis (up 39.5%). Rising construction costs may discourage builders from breaking ground, shrinking future supply, and putting upward pressure on rents.
Even markets with declining multifamily permitting are not immune. As construction costs rise, new development plans could be further curtailed, restricting supply and exerting additional upward pressure on rental prices.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
