As economic data for the past few months trickles in, we're starting to get a better picture of what's been happening in this economy since President Donald Trump announced his barrage of import taxes at the beginning of April, and unleashed a whole bunch of uncertainty on this economy.

Tuesday, for instance, the Census Bureau reported how spending on construction fared in May. The news was not good: Spending fell 0.3% — more than expected and the fifth consecutive monthly decline.

Some of this slowdown in construction spending is a delayed hangover from the construction party we had a couple years ago.

“At the end of 2023, there were one million apartments under construction,” said Robert Dietz, chief economist at the National Association of Home Builders. 

After that surge in apartment building, the market came back down to earth.

“2024 saw a 25% decline in apartment construction starts. There was a big slowdown in the apartment development market due to the high cost of financing,” Dietz said.

Higher interest rates make it more expensive to build. Meanwhile, the demand side of things hasn’t exactly been thrilling builders either. Vacancy rates are higher than normal in more than half of all major metro areas, according to Lu Chen, senior economist with Moody’s Analytics.

“A lot of these metros have current vacancy sitting above 8%, 9%,” she said.

A lot of Sunbelt cities in particular have high vacancies that are holding back construction, Lu said. Good news for renters, they’re holding down rent growth too. 

And there’s a more recent addition to the building buzzkill in general: good old uncertainty.

“I think there’s a lot of uncertainty among contractors about what’s happening, you know, in tariffs, tax rates and labor availability,” said Macrina Wilkins, a senior research analyst at the Associated General Contractors of America. 

How much building materials will cost in a month or six months depends on how tariffs shake out.

“It’s making them a lot more hesitant to take on new projects,” Wilkins said.

Meanwhile in the world of single family homes, which take less time to build than apartments, falling construction spending now is a sign that 2025 got off to a slow start, said Dietz at NAHB.

“It’s just a reminder that the housing market has slowed due to housing affordability and construction cost restraints,” he said.

The NAHB predicts that unmet demand will actually nudge developers to start building more apartments this year.