Boston Faces New Construction Crisis as Building Permits Plunge

Despite building more homes in recent years, Boston’s housing market is headed for trouble as builders pull back from seeking new permits—and renters continue to be priced out of homeownership.

The 2025 Greater Boston Housing Report Card, released by The Boston Foundation earlier this month, shows that Massachusetts has made some headway in construction, adding nearly 98,000 housing units statewide since 2020—71,000 of them in the Greater Boston metro. 

This should come as welcome news to the administration of Massachusetts Gov. Maura Healey, who set a goal last year year to build 222,000 new homes in the Bay State by 2035 as part of the Affordable Homes Act.

But other data analyzed by Boston Indicators, the research arm of The Boston Foundation, point to a bleaker outlook for the city’s housing market, which consistently ranks among the nation's least affordable metros. 

The number of building permits pulled by developers in Greater Boston plunged nearly 67% in three years, from 15,019 in 2021 to just under 9,000 in 2024—and the pace so far this year has been even slower.

Specifically, as of July 2025, permits are running 44% below levels for the same period four years ago, heralding a future slowdown in new construction.

At the same time, researchers warn that the Trump administration's elevated tariffs on imports are making building materials more expensive, while restrictive immigration policies are raising the possibility of construction worker shortages. These trends "threaten to push production costs even higher and slow development to a crawl," states the report.

"Overly restrictive and archaic zoning laws, a historically pervasive not-in-my-backyard culture, and recent increases in construction costs have curbed new construction in the metro," says Realtor.com® senior economist Jake Krimmel.

Greg Vasil, CEO and president of the Greater Boston Real Estate Board, agrees that the "not-in-my-backyard" approach has posed a major obstacle to development in the region.

“Unfortunately, in Massachusetts, we can be very progressive thinkers, but we can be sort of parochial in the way we live our day-to-day life," Vasil tells Realtor.com.

According to the board president, one of the Greater Boston housing market’s biggest problems is a lack of housing mobility, which keeps homeowners in place even when their home no longer fits their needs or lifestyle.

"So you don't have people being able to leave an apartment and transition into a small house, and then as a family grows, go to a bigger house," he says. "And then there are no real options for empty nesters to downsize into something in their community that's more affordable for them as they approach retirement on a fixed income."

One potential solution to this predicament would be to build more smaller homes, similar to what was done to house returning World War II veterans—but Vasil notes that some communities have been hesitant to embrace zoning changes that would open their neighborhoods to higher density development. 

"There's a lot of local communities that may say they want housing, they want more supply, but then they'll kind of whisper to you, ‘You know, just don't go over here, and build it somewhere else,’ because they like the communities the way they are," he says.

Vasil says this NIMBY mindset, often seen in older homeowners—among them his own relatives living in suburban Boston who have grown used to low-density communities—is constraining much-needed development and keeping prices high.

"I try to explain to them, if you're going to make Boston a world-class city, it's got to change. It can't look the way it did for you guys in the '70s and the '80s," he says.

Affordability red flags

All these trends spell trouble for Greater Boston's housing market, which has become increasingly unaffordable due to a combination of limited supply and soaring demand driving up existing home prices.

In October, the median list price in Boston was just under $800,000, the fifth-highest among the top 50 U.S. metros and the highest outside California, according to the latest available monthly housing market trends report from Realtor.com.

And despite the construction of more housing units in Boston since the pandemic, the city’s affordability crisis has only deepened, The Boston Foundation's report reveals. 

Looking at monthly mortgage payments on a starter home, researchers found that in 2025, a household needed to earn more than $162,000 per year to afford a home "at the low end of the market," up from $98,000 four years ago. 

As a result of these persistent affordability headwinds, just 15% of renters in Greater Boston are currently able to afford an entry-level home, down from 30% in 2021. 

"The sobering reality of this combination of price increases and higher mortgage rates is that just 1 in 7 renters in Greater Boston has the income to access a 'starter home' in our region," Luc Schuster, executive director of Boston Indicators, said in a statement. "The data show just how much work we have to do if we are to expand opportunities and unfreeze the market."

Those who opt to lease rather than buy are not immune to Boston’s affordability challenges either: according to the report, nearly half of Greater Boston’s renters are deemed "cost-burdened," meaning that they spend over 30% of their income on housing. 

Additionally, more than a quarter of renters are defined as "severely cost-burdened," spending over half of their income on rent and utilities, based on the latest American Community Survey data released by the U.S. Census Bureau.

Perhaps unsurprisingly, Massachusetts received an F grade on the Realtor.com State-by-State Housing Report Card, an annual review through the Let America Build campaign, which highlights the states that are tackling affordability and new construction—and those that are lagging behind.

What's ahead for Boston?

In 2024, Healey, a Democrat who has made housing a cornerstone of her administration, signed the Affordable Homes Act, which earmarked a record $5 billion for housing and created nearly 50 initiatives designed to speed up statewide construction.

In June, Healey's office identified 450 acres of state-owned surplus land that could be redeveloped into roughly 3,500 new homes across 20 communities.

But Vasil warns that there is "a black cloud on the horizon" in the form of an emerging ballot initiative aimed at enacting rent stabilization across Massachusetts, which could potentially go before voters in November 2026.

"If that were to pass, it would change everything because you would not see rental housing production in Massachusetts," says Vasil, arguing that investors would not want to take the risk of developing housing in a market regulated with government price controls.