Chicago is experiencing the steepest decline in new apartment construction of any major U.S. metro this year, with openings set to fall 60.4% to 3,756 units compared with 2024, according to industry data compiled by RentCafe.com.

The slowdown comes as local developers contend with high labor and material costs, rising insurance premiums, and tighter lending standards. Many of the projects expected to open this year were permitted in 2021 and 2022, while fewer broke ground in 2023 and 2024, contributing to the sharp drop.

The decline in Chicago contrasts with trends elsewhere in the country, where new apartment construction remains strong. Nationwide, an estimated 506,353 units are expected to open in 2025. While this total is below last year’s record, it remains well above the annual averages recorded since 2015, reflecting ongoing demand for rental housing.

Chicago is not alone in seeing a steep pullback. Madison, Wisconsin, ranks second for the largest decline, with new apartments dropping 59.3% to 1,664 units. Higher interest rates and an influx of high-end apartments appear to be slowing development in the college town. Visit Chicago Construction News for more info.