The Current State of New Construction and Development in Los Angeles

The temperate clime of Los Angeles keeps residents close and draws transplants from across the globe. Beautiful weather conditions also facilitate year-round construction.

However, weather and consumer demand aren’t the only factors impacting new construction in Los Angeles. The building industry faces various legal, practical, and logistical challenges at any given time. What’s happening in L.A. construction right now, and what can homebuyers expect moving forward?

New Construction in Los Angeles Has Slowed

New construction in the L.A. area experienced a slowdown in the first half of 2025 for several reasons, starting with continued high interest rates. 



The Federal Reserve lowered rates by a full 1% in 2024, and many experts predicted even lower rates in 2025. However, the trend slowed, with only a 0.25% cut materializing so far this year.

In addition, increased material costs, a continuing labor shortage, and economic uncertainty have impacted the building industry in L.A. The passage of United to House Los Angeles (ULA) could be contributing to a slowdown as well.

Also known as the mansion tax, Measure ULA taxes high-value property sales ($5 million and above) to fund affordable housing and rent assistance programs. Some speculate that developers are hesitant to tackle larger building projects due to the potential for reduced profitability.

Demand for Single-Family Homes Remains High

Despite the many challenges facing construction and development, the drive for homeownership remains high, especially when it comes to single-family homes. New housing is particularly popular.

There are a couple of reasons for this. Owners selling homes in established neighborhoods tend to aim for high resale prices to get the most from their investments. By comparison, new construction could offer more bang for a buyer’s buck, as well as opportunities for customization.

Renewed Growth Is Expected

Although current events have slowed construction in the Los Angeles area, demand for housing remains high. In addition, the Department of City Planning projects significant population growth, fueling new construction in Los Angeles over the next 15 years.

If you’re ready to become a homeowner or upgrade to a brand-new custom home, contact Advanced Builders & Contractors today to learn more about new construction services.