Apartment Development in Opportunity Zones May Matter for Inflation
Legislation introduced during the first Trump administration sought to incentivize investment in low-income areas of the U.S. through tax benefits. One measurable result was a surge in apartment development within these Opportunity Zones (OZs). A shift in housing-supply dynamics draws attention since housing costs influence inflation.
Historically, higher-income census tracts have dominated new apartment development, but the pattern shifted two years after the program’s introduction in 2018. From 2020 to 2024, the zones had an average annual construction rate of 4.6%. Census tracts not eligible for the program had an average rate of 3.7%, while in what we term “also-ran” areas — those that qualified as low-income census tracts but were not selected for the program — the rate was 2.7%.
An eye to inflation
Given that housing accounts for about one-third of the Consumer Price Index, an increase in supply — a prerequisite for reducing housing costs — may carry implications for broader U.S. inflation trends.
The author thanks Alexis Maltin for her contributions to this article.
Construction rate is defined as the number of units constructed during the year as a percentage of existing stock. MSCI Real Capital Analytics data as of June 2025.
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