Boston apartment construction's steady decline

Roughly 5,593 new apartment units are expected in the greater Boston area this year, just over half the units that were built in 2020, according to a new report.

Driving the news: Boston has seen a steady decline in new apartment construction in the last three years, per a RentCafe analysis of data from real estate intelligence service Yardi Matrix.

Why it matters: A housing shortage in the U.S. has contributed to the rising cost of both renting and buying.

• Boston trails the nation in home construction, with half the national average of home building permits issued last year.

Zoom in: A 2022 study by the nonprofit Up For Growth found that Massachusetts needed 100,000 new housing units to keep up with demand. It also found the shortfall between demand and new homes in the Bay State doubled between 2012 and 2019.

• Another report by the website Construction Coverage ranked Massachusetts near the bottom for housing production among states last year.

Meanwhile: Rents in Boston are still sky high, averaging around $3,000 a month and climbing.

The latest: Mayor Michelle Wu is considering zoning reforms and tax incentives for homebuilders to help speed up production.

• Boston planning authorities approved nearly 900 new units across the city last week.

Zoom out: A surge in new apartment supply — 1.2 million units were completed during the pandemic — helped slow rent growth nationwide, but Boston has not kept pace with other metros in growing areas.

• New York City is projected to lead the nation in 2023 with about 33,000 new apartment units.

• Dallas-Fort Worth comes in second with 23,700, followed by Austin and Miami.

Threat level: Many first-time buyers feel priced out of the brutal housing market nationwide.

• Nearly three-fourths of renters say they're renting in an area where they couldn't afford to buy, according to a new survey from RealPage, a real estate analytics and software company.

What's next: 1 million rental units are slated for completion nationwide through 2025, but higher costs and other headwinds could slow developers' pace in future years.

• "Tightening of bank lending standards — combined with rising costs of construction materials, labor and land — has made new projects harder to pencil," senior analyst Doug Ressler at Yardi Matrix says in the RentCafe report.