Will Trump’s Tariffs Flatten Texas’ Multifamily Rent Decline?

Tariffs could curb the trend of falling multifamily rents, which has hit Texas metros harder than other parts of the country since 2022.

The average Austin rent fell 4.5 percent in March, compared to the previous year, according to Realtor.com. Only three other major metros experienced steeper drops: Denver, with a 6.3 percent decline, followed by San Diego, California, and Birmingham, Alabama.

A rush of apartment development flooded the market after the pandemic, causing markets like Austin to be oversupplied. But with material costs rising due to tariff speculation, construction is likely to die down.

Some of President Donald Trump’s tariffs apply specifically to materials integral to multifamily apartment buildings.

“The recently imposed 25 percent tariffs on imported steel and aluminum, important multifamily building materials, could significantly affect the multifamily housing supply by driving up construction costs,” a Realtor.com report stated. “These rising expenses might discourage builders from breaking ground and force developers to delay or halt projects. Ultimately, these added costs are likely to be passed on to renters, pushing rental prices higher.”

The volatility of Trump’s tariff rollout could make lenders skittish about construction loans, said Steve Triolet, senior vice president of research and market forecasting at Partners Real Estate.

“If the impending tariffs are implemented, they will slow multifamily construction by inflating material costs and disrupting supply chains. Rising prices for key inputs like steel, lumber and electrical components — already up 5 to 10 percent in early 2025 — coupled with delays in material availability, are prompting developers to pause or scale back projects,” Triolet said. “This hesitation is compounded by tighter financing conditions, as lenders grow cautious amid cost uncertainty, potentially reducing new starts and aligning supply more closely with demand by 2026.”

Developers could delay new building in oversupplied markets, which include Dallas-Fort Worth. The metro’s multifamily vacancy reached 11.2 percent in the first quarter of the year, a 20-year high.

Tariffs won’t evenly hike costs for all buildings, Triolet said. Trump’s tariffs on steel and aluminum took effect on March 12. Because low-rise multifamily apartments tend to use more lumber than steel or aluminum, they may be insulated from cost hikes that could more directly affect office buildings, for example. On the other hand, steel is critical to high-rise projects in denser urban areas.

However, Trump has shown readiness to impose tariffs on lumber as well. Trump directed the Commerce Department last month to investigate wood imports, including timber, lumber and derivative products, and the report is due Nov. 26. The White House hasn’t specified what rate it might set for wood tariffs, but every other tariff on a specific product — copper, cars and car parts, semiconductors, pharmaceuticals, steel and aluminum — is set at 25 percent.

About 85 percent of softwood lumber imported to the U.S. comes from Canada, according to the National Association of Homebuilders. Trump has threatened, imposed and exempted tariffs on Canadian goods since Feb. 1.

“Tariffs are likely to slow multifamily supply in the near term in DFW by raising costs, delaying projects and tightening financing,” Triolet said. “Suburban submarkets like Frisco will fare better than urban cores, but all face cost and delay risks. Developers can mitigate through modular construction or local sourcing, but affordability remains a concern.”