Photo Credit: Ungvar / Shutterstock
In the aftermath of the COVID-19 pandemic, elevated real estate values and rents have stretched budgets for homebuyers and renters alike. The median home sales price in the U.S. in the first quarter of 2024 was nearly $92,000 higher than just 4 years prior. Likewise, rent prices are rising again after a temporary decline following the pandemic surge.
Since the beginning of 2022, the U.S. Federal Reserve has raised interest rates in an effort to combat inflation throughout the economy. Between rising mortgage rates and the rapid run-up in home values, the residential real estate market has cooled down slightly. As of Q2 2024, the median home sale price declined 6.8%—down from just over $442,000 in Q4 2022. But while a leveling-out in demand may have helped to slow down price growth, these measures cannot solve another fundamental challenge in the U.S. housing market: a major shortage of housing supply.
According to an analysis from Freddie Mac, existing home inventory picked up 19% year-over-year to 1.28 million units, but remains below pre-pandemic averages. To make matters worse, the National Association of Home Builders’ (NAHB) Housing Market Index—a measure of home builder confidence where a value below 50 is considered “poor”—declined to 43 in June 2024. The NAHB attributes this low rating to higher mortgage rates and increased construction costs.
Authorized Housing Units Over Time
After trending upward for over a decade, home building has dropped off significantly
Source: Construction Coverage analysis of U.S. Census Bureau and U.S. Department of Housing and Urban Development data | Image Credit: Construction Coverage
The lack of housing supply has been exacerbated by significant underinvestment in new housing since the Great Recession. New housing authorizations tend to fall temporarily during economic downturns, but the collapse of the housing market in the mid-2000s and ensuing recession sent authorizations to historic lows. The number of new residential units authorized has recovered slowly over the last decade, but as of June 2024, new authorizations declined nearly 25% after peaking in January 2022.
Single-Family Home Construction Times
Amid construction labor shortages, starts & completions are taking longer than before COVID
Source: Construction Coverage analysis of U.S. Census Bureau’s Survey of Construction data | Image Credit: Construction Coverage
Despite a clear need for new housing supply, the construction industry struggled to keep up during the pandemic. COVID-related disruptions produced worker shortages and hindered supply chains, making it harder and more expensive to obtain building materials. As a result, more single-family units saw monthslong delays in the time it takes to start and complete construction when compared to years past.
The effects of these disruptions continue to linger in the residential housing industry. The share of authorized single-family units that took two months or longer to start construction after initial authorization increased from 20% in 2019 to 31% in 2023. These delays were even more pronounced when considering the time from construction start to completion, where 55% of authorizations took over two months to complete this phase compared to only 39% in 2019.
Residential Building Permits by State
Two Mountain West states, Utah and Idaho, are building the most homes
Source: Construction Coverage analysis of U.S. Census Bureau’s Building Permit Survey and Population and Housing Unit Estimates data | Image Credit: Construction Coverage
Although supply is a challenge across the U.S., some locations are progressing faster than others in authorizing new construction. Fast-growing states in the Mountain West, like Utah and Idaho, along with Sun Belt destinations like Florida and the Carolinas, lead the U.S. in the rate of new housing development. At the local level, major metros in these fast-growing states are also among those leading in new home construction.
Below is a breakdown of residential housing permit authorizations for the top and bottom metropolitan areas and states. The analysis was conducted by Construction Coverage, a website that provides construction software and insurance reviews, using data from the U.S. Census Bureau and Zillow. For more information and complete results see the original post—U.S. Cities Building the Most Homes—on Construction Coverage.
Large Metros Building the Most Homes
States Building the Most Homes
Methodology
Photo Credit: Ungvar / Shutterstock
To determine the locations building the most homes, researchers at Construction Coverage analyzed data from the U.S. Census Bureau’s 2023 Building Permit Survey, U.S. Census Bureau’s 2022 Population and Housing Unit Estimates, and Zillow’s Zillow Home Value Index (ZHVI). The researchers ranked locations according to the number of new housing units authorized per 1,000 existing homes in 2023. In the event of a tie, the location with the higher total new housing units authorized in 2023 was ranked higher. Researchers also calculated the number of new housing units authorized per 1,000 existing homes in 2021, the total new housing units authorized in 2021, the percentage change in housing units authorized from 2021 to 2023, and the median home price in June 2024.
For relevance, only metropolitan areas with available data were included in the analysis. Additionally, metro areas were grouped into the following cohorts based on population size:
- Small metros: less than 350,000
- Midsize metros: 350,000–999,999
- Large metros: 1,000,000 or more
For complete results, see U.S. Cities Building the Most Homes on Construction Coverage.
