Los Angeles Housing Construction Declines 57% in 2025

Housing construction in Los Angeles sharply declined in early 2025, with permits dropping 57% compared to the previous year, a trend attributed to high interest rates, tariffs, economic uncertainty, and the city's Measure ULA transfer tax. The January wildfires contributed to disruptions but were not the sole cause, as the decline began prior to the fires and was most pronounced in areas like the San Fernando Valley and South Los Angeles. Economists warn that this sustained pullback could worsen the city's housing affordability crisis and strain municipal budgets, especially as Mayor Karen Bass announced thousands of job cuts to address a nearly $1 billion deficit. Nationally, single-family housing starts fell over 14% in March, primarily due to higher mortgage rates, increased construction costs from tariffs, and reduced buyer demand, with most new homes priced out of reach for over 70% of households. Builders in oversupplied markets such as Texas and Florida are now offering significant discounts and incentives to move unsold inventory, while more constrained markets like coastal California still see high demand and firm prices. Overall, the U.S. housing market is experiencing regional disparities, with affordability and supply challenges intensifying in many cities.