Ground view looking up at a construction crane and high-rise development
Department of Planning & Community & Economic Development

Housing, Construction, and Inflation Cost Growth

Graph showing the cost of construction rising at higher rates than the average rate of inflation
Housing and Cost Index Growth, 2015-2025

(Note: This page is part of the 2025 Housing Snapshot report)

Housing cost (either median rent or monthly homeowner costs), especially for new housing, can be dependent on factors such as inflation (represented here by the Average Annual Consumer Price Index (CPI)), construction cost, and land cost.

Tracking the cumulative year-to-year percentage increase in costs for these figures from a 2015 base year to 2023 (the most recent year for which all data is available), we see that the average costs of local land and construction in the Midwest each rose by more than 50%, pulling up housing costs by 41% for renters and 34% for homeowners. Growth in inflation (Average Annual CPI) for the same period was 26%.

Given the continued upward trajectory of land and construction costs since 2023, we expect that as housing costs estimates become available for 2024 and 2025, they’ll reflect a continued increase. In a healthy housing market, increased supply of rental and owner-occupied housing options can help moderate housing cost increases; however, that benefit can be offset if the costs to build housing continue to rise.

View Figure Data
Housing and Cost Index Growth 2015 to Present
YearMedian Gross RentMedian Monthly Owner CostAverage Annual CPIConstruction Cost IndexLand Cost/Acre
20150.0%0.0%0.0%0.0%0.0%
20162.8%-2.4%0.8%4.0%2.5%
201711.6%-3.3%2.5%8.3%8.9%
201814.7%6.5%4.5%14.9%15.4%
201917.7%7.1%6.1%18.3%21.8%
202016.9%5.4%7.1%21.0%25.2%
202125.1%10.5%12.5%35.6%24.1%
202228.4%17.4%21.5%44.7%41.2%
202341.3%33.8%26.1%50.3%52.7%
2024No DataNo Data29.5%55.6%63.1%
2025No DataNo Data32.3%65.2%76.6%

Sources: ACS 1-Year Estimates, Tables B25111 and B25119. Construction Costs index is a weighted average of the year-over-year change of the Turner Building Cost Index (50%) and the Mortenson Construction Cost Indices for Milwaukee (25%) and Minneapolis (25%). Inflation rate is the year-over-year change in the Consumer Price Index as reported by the Minneapolis Federal Bank. Land Cost/Acre is determined by Wisconsin DOR Equalized Values and City of Madison Planning Division data.

Next Chapter

Impact of City Funding on Housing Supply

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Housing Initiatives