Affordable Housing Crisis Persists Despite New Developments and Construction Frenzy

A new affordable housing project in the northeastern US state of Pennsylvania highlights the intense pressure facing American renters, even as data suggests the country's turbulent rental market may have reached a precarious equilibrium at significantly elevated levels.

After seven years of development and an investment exceeding $18 million, Harbor Village, a 40-unit affordable rental complex in Carlisle, Pennsylvania, opened its doors in January. The project, spearheaded by local non-profit Safe Harbour, was met with overwhelming demand. "By the time we started screening, there were over 400 applications," said Scott Shewell, Safe Harbour's CEO. "And I still get calls every day."

This scarcity is reflected in Carlisle's market. Median rent reached $1,259 in May, a 6% annual increase and one of the fastest-growing rates nationally. Shewell attributes this to "blockbuster growth" in the region, where the population has surged nearly 12% since 2020, overwhelming local efforts to provide affordable options.

A Nationwide Surge Stabilizing, But Not Receding

Carlisle's situation is part of a broader, post-pandemic US trend. While recent analysis shows rental price growth has largely levelled off across most metropolitan areas in early 2025, the current plateau sits dramatically higher than pre-pandemic levels.

Key findings from market data analysis covering 202 major US metros:

• 94% had significantly higher average rents between January-May 2025 compared to the same period in 2019.
• Excluding areas with minimal change, prices are up an average of 31% since 2019.
• The pandemic disrupted traditional patterns, causing a brief dip followed by a sharp rebound to record highs before stabilising in late 2022.
• This "new baseline" persists as of May 2025, offering stability but no relief from high costs.

Heavy Burden on Households

The sustained high costs are placing severe strain on American households:

• Rent Burden: Census data reveals 25% of US renters spent more than half their income on rent in 2023, up from 22% in 2019. This 3-percentage point increase equates to millions more families under severe financial pressure.
• Inflation Synergy: These high housing costs, combined with broader inflation affecting essentials like food and energy, created significant economic hardship. This economic strain became a dominant issue in the recent US political cycle.

Market Dynamics Holding Prices High

Housing analysts suggest a return to 2019 price levels is unlikely. "More realistic than rent prices coming down is rent prices stabilizing at a place where incomes can catch up," stated Rob Warnock, a senior researcher at Apartment List.

Two key factors are currently preventing further surges:

1. Slowed Demand: Rental demand has cooled significantly.
2. Construction Boom: A wave of new apartment supply, planned during peak pandemic growth, is now hitting the market.

Localised Exceptions: Bozeman and Austin

While most markets are stable or slightly up, a few areas experienced notable price declines over the past year, often linked to pandemic migration surges and subsequent overbuilding:

• Bozeman, Montana (-10%): Pandemic-era remote workers flocked here, prompting rapid development. A glut of new units delivered simultaneously led to high vacancies and falling rents, sometimes masked by incentives like free rent or electronics.
• Austin, Texas (-6.4%): Similar dynamics played out. "The market just kept accelerating and the bubble burst," observed Stacey Auzanne, a local property manager. Landlords are now holding rents steady or even lowering them slightly to retain tenants in a supply-heavy market.

Future Uncertainties and Persistent Inflation Pressure

Despite the current stability, concerns linger. Experts warn that policies impacting the construction workforce, such as stringent immigration controls or trade tariffs, could potentially reignite price pressures by constraining new supply or increasing building costs.

Furthermore, while US rental inflation has moderated from its 2023 peak above 8%, dropping to 3.8% in May 2025 (its smallest annual increase since early 2022), housing costs remain the single largest contributor to overall inflation, accounting for 35% of price increases. This slowdown primarily reflects lower rents on new leases finally influencing rates for existing tenants.

Conclusion

The US rental market appears to have settled into a new, much higher plateau than before the pandemic. While dramatic price surges have ceased for now, the cost of housing remains a profound burden for millions of American households, significantly impacting their disposable income and contributing heavily to the country's overall inflation picture. The opening of projects like Harbor Village underscores the critical, yet insufficient, efforts to address the deep-seated affordability crisis.