Anyone hoping that economic uncertainty would ease throughout the year has so far been disappointed. President Trump’s fluctuating tariff policies have only intensified uncertainty, sending ripples across the housing industry.
According to a recent webcast by RealPage Analytics, tariff-related instability is reshaping today’s housing landscape—driving up construction costs, fueling inflationary pressures, and altering renter behavior. Compounding the issue are decelerating wage growth and a cooling labor market.
This environment is affecting household formation, especially among Gen Z renters. Burdened with student loan debt and facing increasing affordability challenges, many are delaying their transition into independent living. Rising living costs are forcing many young adults to remain in their parents’ homes longer or to double up with roommates, which is softening entry-level rental demand—even in typically resilient markets, said Arben Skivjani, RealPage chief economist and director of forecasting.
As trade barriers inflate material and labor costs, developers and operators are being pushed to rethink everything from sourcing strategies to pricing models. Understanding how these economic pressures alter demand patterns is essential to navigating the current environment and positioning for long-term stability, noted RealPage.
Navigating the tariff minefield
Developers are exploring alternative sourcing strategies to contain rising costs, though this often means longer project timelines and potential compromises in quality control. Since 2018, roughly 500,000 new units have been delayed. (see chart below).
Today, many developers report delays exceeding a month, pressuring them to switch suppliers or adapt to new procurement pipelines.
“Developers have had to implement highly creative strategies to avoid passing costs on to renters,” said RealPage market analyst Adam Couch. “But even with those efforts, entry-level rental demand is under strain in many key markets.”
A growing number of developers are now conducting detailed risk assessments of their supply chains and pinpointing which materials or components are most vulnerable to tariff shifts. This enables them to negotiate pricing guarantees and lock in contracts in advance.
“One developer even told us they added a specific tariff contingency clause into a recent contract renewal just to protect themselves from sudden policy changes,” said Couch adding, “Many are now building in an eight to 12 percent buffer to absorb unexpected cost hikes, without permanently inflating budgets.”
On the Operations and Investment Side
Operationally, preventive maintenance is receiving renewed focus. Proactive operators are increasing maintenance budgets to defer major capital expenditures until the tariff climate stabilizes, with a focus on maintaining resident satisfaction.
From an investment standpoint, underwriting assumptions are shifting. Developers are now adjusting expectations, front-loading purchases early in the development timeline to minimize exposure to mid-project price hikes.
Staying informed about policy changes is also critical. “Being plugged into upcoming shifts gives developers the opportunity to act rather than react—turning unpredictable disruptions into manageable events,” explained Skivjani.
Four Strategies to Maintain Operational Performance in a Tariff-Pressured Market
1. Prioritize Turn Times on Larger Units: Focus on two-bedroom and larger floor plans, which appeal to the growing population of renters opting for shared living to manage costs.
2. Incentivize Longer Leases: Offer small discounts for lease terms beyond the traditional 12 months. This not only stabilizes revenue but provides renters with much-needed rate certainty.
3. Flexible Payment Options: Accommodate renters by aligning rent due dates with paycheck cycles or offering bi-weekly payment plans. This helps reduce delinquencies and shows an understanding of tenants’ financial pressures.
4. Creative Concessions: Instead of rent discounts that cut into base rent, consider perks like local grocery discounts or complimentary streaming services. These add tangible value for renters without impacting revenue streams.
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