Boston, MA – October 22, 2025 — A new report from Boston Indicators offers both optimism and caution for Massachusetts’ ambitious housing goals, revealing that while the state made significant progress in recent years, construction activity may soon stall due to rising costs and declining permits.
Earlier this year, Gov. Maura Healey’s administration set a bold target: 222,000 new homes by 2035 — the number state officials estimate is needed to counter Massachusetts’ worsening housing shortage. The Greater Boston Housing Report Card, previewed this week, paints a mixed picture of the state’s progress toward that goal.
.jpg)
Between April 2020 and July 2025, Massachusetts’ housing stock grew by 97,656 units, according to Boston Indicators’ analysis of address and permitting data. Of that total, 71,135 units were built in Greater Boston, with nearly 40,000 added in just the past year.
“Massachusetts actually put a ‘decent’ dent in the shortage in recent years,” said Luc Schuster, executive director of Boston Indicators, in an interview with WBUR.
The increase in housing supply has also begun to ease upward pressure on prices. “After several years of steep rental and home sales price increases, there has been ‘a bit of a leveling off’ in 2025,” Schuster noted. According to Zillow, home values are up just 1.2% this year, while the average rent has actually dipped slightly.
“That does signal that when we build significantly more housing, we can start to move the needle on price increases,” Schuster said.
Despite these gains, the report warns that new construction could slow dramatically in the coming years. Recent permitting data shows that new housing permits are down 44% compared to 2021, signaling reduced activity on the horizon.
Schuster explained that many of the homes completed this year were approved during 2021 or 2022, when borrowing costs were historically low. The subsequent rise in interest rates has since deterred developers from breaking ground on new projects.
“The permits are really useful as a leading indicator for how much more housing might come online in the coming two or three years,” he said. “And when you look at that data, the story’s really concerning.”
In addition to higher borrowing costs, Schuster pointed to tariffs and labor shortages as compounding factors slowing construction. He urged state and local policymakers to act decisively to address the underlying barriers to new development.
He said officials should “do everything they can” to make it easier to build, including loosening restrictive local zoning rules that limit new multi-family housing.
“The vast majority of land in Massachusetts is restricted for only constructing large, single-family homes,” Schuster said. “This is the most expensive type of housing ... and we've set local rules that say that's legally the only type of housing you can build.”
The findings reinforce the need for pro-housing zoning reforms, especially as cities and towns face growing pressure to accommodate workforce and family housing. Healey’s administration has emphasized housing as a core pillar of its economic strategy, framing affordability as essential to retaining young professionals and supporting long-term growth.
Experts say the state’s recent production numbers are promising — but maintaining that pace will require policy changes that make multi-unit and mixed-use projects easier to approve and finance.
“If the permitting slowdown continues,” Schuster warned, “the momentum we’ve built could evaporate within just a few years.”
The report’s release comes as Massachusetts continues to rank among the most expensive housing markets in the U.S., with affordability concerns now affecting both renters and homeowners statewide. Despite incremental progress in cities like Boston, Cambridge, and Worcester, the challenge remains particularly steep in suburban and rural areas where local zoning remains restrictive.
Policymakers are watching closely as the state seeks to balance growth with community input — and ensure that the next decade of housing development delivers equitable results across income levels and regions.
Originally reported by Nik DeCosta-Klipa in Wbur.
.webp)
