Housing Construction in LA Falls 57% So Far in 2025

Housing construction in Los Angeles turned sharply negative in the first quarter of 2025.

Officials issued only 1,325 housing permits in the quarter — a 57 percent drop compared to the same period in 2024, according to a Los Angeles Times article based on a report by Hilgard Analytics. An analysis by Hilgard found the downturn resulted from multiple challenges facing developers, including high interest rates, economic uncertainty, new tariffs and the city’s controversial Measure ULA, a tax on large property sales.

The January wildfires, which caused widespread disruptions, were also cited as a contributing factor, though their impact is likely temporary.

The decline was widespread, but most pronounced in the west and northeast San Fernando Valley and south Los Angeles. Notably, this trend predates the wildfires, as housing permits had already fallen 23 percent in 2024 compared to 2023. Hilgard’s data, drawn from the Los Angeles Department of Building & Safety, covers new single-family and multifamily units but excludes accessory dwelling units, or ADUs.

The continued drop in housing development could worsen Los Angeles’ already critical housing affordability crisis. Economists stress that building more homes is essential to curbing rising prices and rents.

“If we aren’t building now, from a long-run perspective, that says higher prices and higher rents at some point in time in the future,” Christopher Thornberg, founding partner of research data firm Beacon Economics, told the Times.

Reduced construction also affects the city’s budget, as development typically increases tax revenues. This comes at a time when the city is grappling with a nearly $1 billion deficit.

A separate report this month indicated permitting for new multifamily projects in the city fell 18 percent in the first year since Measure ULA was enacted two years ago, resulting in 1,910 fewer apartments in projects of 20 or more units.

And, another report found sales of apartment buildings, office towers and industrial properties across the city of Los Angeles declined by as much as 50 percent since the tax, but that sales in neighboring cities remained relatively stable.