With housing inventory at record lows, it now may be more important than ever to build more homes. There are about 500,000 fewer homes available for sale across the country compared to the average number of listings in the last 5 years. As a result, the housing inventory shortage has pushed national home prices in March to a record high of nearly $330,000. If home prices continue to rise at this pace, many would-be homebuyers will be priced out of the market, hurting homebuying activity.
The National Association of REALTORS® tracks the number of building permits issued by metro area every month and identifies the top 10 markets with the most and least single-family building permits issued within the last 12 months. The purpose of this blog series is to identify where housing construction is rising and where we need to address the issue of underbuilding at the local level.
At the national level, housing starts surged in March by 19% to a seasonally adjusted annual rate of 1.74 million units, the highest level since 2006. In fact, this increase in housing starts was well above expectations. Along with housing starts, building permits are also a leading indicator of housing activity for the upcoming months at the local level. Building permits provide an estimate of the number of new housing units that have been authorized by the government. Specifically, in March, single-family building permits rose in 42% of the metro areas across the country.
The analysis includes data for 260 metropolitan areas across the country. Find the areas with the most single-family building permits issued within the last 12 months ending in March (expect large metro areas to have the highest number of single-family permits due to larger population) below. While 10 to 12 months is the typical time that it takes to build a single-family home, more than 14,000 new single-family homes have already been added or they will be added soon to the market in the following months.
Areas with the most single-family building permits in absolute values (during April/2020 – March/2021):
We also identified the areas with the fastest/slowest growth of single-family permits. Since last year, the year-over-year comparisons may look much higher due to the “base effect”, we compare with the 12-month average in the last 20 years of single-family building permits.
Areas with the fastest/slowest growth of single-family building permits:
In the areas below, the number of single-family building permits is more than twice the number of single-family building permits in the last 20 years.
Hover over the map below to see how many single-family building permits were issued in the last 12 months in 260 metro areas across the country.
Meanwhile, the U.S. Census recently published the first results of the 2020 Census showing the number of residents at the state and national levels. Although more data releases are yet to come, these figures provide a first look about where resident population has risen faster in the last decade. Among the 50 states, the District of Columbia and Puerto Rico, resident population rose in every state but Illinois, Mississippi and West Virginia. Utah (18%), Idaho (17%) and Texas (16%) were the three states with the highest resident population gains in the last 10 years. Since more people will seek housing, this translates to an even stronger housing demand in these areas. It’s promising to see that several areas with the most single-family permits were also in the top 10 states gaining the most residents. Nevertheless, this also means that housing construction needs to remain strong or even stronger to accommodate increased demand.