Housing Construction in L.A. Falls 57% So Far in 2025

April 22, 2025 — The Real Deal

Housing construction in Los Angeles has dropped sharply in the first quarter of 2025. According to new analysis, the city approved just 1,325 new housing units from January through March—representing a 57 percent decline compared to the same period in 2024.

Analysts at Hilgard Economics attribute the slowdown to several compounding factors:

• Persistently high interest rates

• Increased material costs and construction tariffs

• Ongoing economic uncertainty

• The implementation of Measure ULA, which imposes a transfer tax on high-value property sales

• Delays caused by the January wildfires, including the Palisades Fire, which disrupted construction timelines and permitting in parts of the city

The decline was most significant in areas of the West San Fernando Valley, Northeast Valley, and South Los Angeles, though nearly all council districts experienced some level of permitting drop.

This trend follows a 23 percent decrease in total housing permits during 2024 compared to 2023—suggesting an ongoing cooling of Los Angeles’s housing pipeline. Economists warn that a prolonged slowdown in construction could worsen the region’s housing affordability crisis and may lead to shortfalls in city revenue tied to development.