Cities with the highest increase in home construction

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After a two-year frenzy during the COVID-19 pandemic, the residential real estate market began to show signs of slowing down this spring and summer. Mortgage rates are up and home loan applications are down year over year. The stock of homes for sale is increasing and sellers are more willing to lower their asking prices.

Although there are recent signs that the market is balancing out, the past two years have brought unprecedented growth in home values, to the benefit of current homeowners and builders. With low interest rates, homebuyers were able to borrow more money and pay more for homes. This sent prices to record highs. And with values ​​soaring, builders have rushed to build homes: the number of homes currently under construction is at its highest level since the 1970s.

The value of new residential units had already been on a steady upward trajectory since the collapse of the housing bubble and subsequent Great Recession in the mid-2000s. The annual value of new housing units nearly tripled over the next decade to $280 billion in 2019. But that growth accelerated further during the COVID-19 pandemic, with new units valued at $307 billion. dollars in 2020 and jumping to $380 billion last year.

The surge in new home values ​​came amid a period of historically low interest rates as the U.S. Federal Reserve tried to stimulate the economy during the COVID-19 pandemic. As the central bank of the United States, the Fed’s monetary policy actions affect the cost of borrowing for other banks, and therefore their customers. The Fed cut its effective federal funds rate to near zero at the start of 2020 and kept rates low for the next two years. But now, with persistent inflation largely affecting all corners of the economy, the Fed has started raising interest rates to reduce borrowing and cool the economy, and more increases are on the horizon this year. As borrowing costs rise, fewer homebuyers will seek mortgages and financing new construction projects will become more expensive.

While interest rate hikes are likely to cool demand and slow the pace of house price increases, the Fed’s recent actions cannot address more fundamental supply issues in the housing market. According to researchers at Freddie Mac, the United States had a housing supply unit shortfall of 3.8 million in 2020. And with labor shortages and rising material costs during the pandemic, new construction projects may take longer or cost more.

Some locations, however, are investing more in new residential construction than others compared to the same time last year. Massachusetts, one of the most expensive states for housing due to low supply, saw the value of new residential housing permits increase by more than a third between the first months of 2021 and the same period in 2022. Another high-cost state, Hawaii, grew 28.2% over the same period. And at the metropolitan level, major cities in many parts of the United States are adding thousands of new units worth hundreds of millions of dollars.

To determine the metros with the largest increases in home construction, Construction Coverage researchers analyzed the latest data from the US Census Bureau. Building Permit Survey. The researchers ranked metropolitan areas by the value of authorized residential housing permits from January to April 2022 compared to the same period in 2021.

Here are the US metros with the biggest increase in home construction.

Major metros with the highest increase in home construction

Photo credit: Sean Pavone/Shutterstock

15. Richmond, Virginia

  • Percentage increase in value of new residential units: +15.3%
  • Total increase in the value of new residential units: $82,553,000
  • Percentage increase in new residential units: +29.2%
  • Total increase in new residential dwellings: +889

Photo credit: Sean Pavone/Shutterstock

14. Tucson, AZ

  • Percentage increase in value of new residential units: +15.9%
  • Total increase in the value of new residential units: $94,136,000
  • Percentage increase in new residential units: +22.6%
  • Total increase in new residential dwellings: +477

Photo credit: Andrew Zarivny/Shutterstock

13. Denver-Aurora-Lakewood, CO

  • Percentage increase in value of new residential units: +18.2%
  • Total increase in the value of new residential units: $326,017,000
  • Percentage increase in new residential units: +2.3%
  • Total increase in new residential dwellings: +208

Photo credit: Jon Bilous / Shutterstock

12. Charlotte-Concord-Gastonia, NC-SC

  • Percentage increase in value of new residential units: +20.2%
  • Total increase in the value of new residential units: $428,476,000
  • Percentage increase in new residential units: +27.5%
  • Total increase in new residential dwellings: +2,443

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11. San Diego-Chula Vista-Carlsbad, CA

  • Percentage increase in value of new residential units: +20.4%
  • Total increase in the value of new residential units: $140,372,000
  • Percentage increase in new residential units: +2.8%
  • Total increase in new residential dwellings: +97

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10. Minneapolis-St. Paul-Bloomington, MN-WI

  • Percentage increase in value of new residential units: +22.1%
  • Total increase in the value of new residential units: $405,987,000
  • Percentage increase in new residential units: +12.3%
  • Total increase in new residential dwellings: +988

Photo credit: Sean Pavone/Shutterstock

9. Houston-The Woodlands-Sugar Land, TX

  • Percentage increase in value of new residential units: +22.7%
  • Total increase in the value of new residential units: $1,023,183,000
  • Percentage increase in new residential units: +18.2%
  • Total increase in new residential dwellings: +4 138

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8. Boston-Cambridge-Newton, MA-NH

  • Percentage increase in value of new residential units: +23.8%
  • Total increase in the value of new residential units: $282,736,000
  • Percentage increase in new residential units: +6.7%
  • Total increase in new residential dwellings: +371

Photo credit: Songquan Deng / Shutterstock

7. Orlando-Kissimmee-Sanford, Florida

  • Percentage increase in value of new residential units: +26.8%
  • Total increase in the value of new residential units: $513,628,000
  • Percentage increase in new residential units: +41.8%
  • Total increase in new residential dwellings: +3,526

Photo credit: George Raymond Gibbs/Shutterstock

6. Rochester, New York

  • Percentage increase in value of new residential units: +31.1%
  • Total increase in the value of new residential units: $42,197,000
  • Percentage increase in new residential units: +47.0%
  • Total increase in new residential dwellings: +304

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5. Baltimore-Columbia-Towson, MD

  • Percentage increase in value of new residential units: +32.6%
  • Total increase in the value of new residential units: $147,101,000
  • Percentage increase in new residential units: +59.6%
  • Total increase in new residential dwellings: +1 181

Photo credit: Ivan Cholakov / Shutterstock

4. Detroit-Warren-Dearborn, MI

  • Percentage increase in value of new residential units: +33.3%
  • Total increase in the value of new residential units: $244,210,000
  • Percentage increase in new residential units: +1.4%
  • Total increase in new residential dwellings: +41

Photo credit: Ingus Kruklitis / Shutterstock

3. New York-Newark-Jersey City, NY-NJ-PA

  • Percentage increase in value of new residential units: +33.6%
  • Total increase in the value of new residential units: $845,609,000
  • Percentage increase in new residential units: +30.3%
  • Total increase in new residential dwellings: +5,243

Photo credit: Jon Bilous / Shutterstock

2. Riverside-San Bernardino-Ontario, California

  • Percentage increase in value of new residential units: +34.3%
  • Total increase in the value of new residential units: $379,935,000
  • Percentage increase in new residential units: +23.7%
  • Total increase in new residential dwellings: +1 104

Photo credit: Agnieszka Gaul / Shutterstock

1. Indianapolis-Carmel-Anderson, IN

  • Percentage increase in value of new residential units: +34.3%
  • Total increase in the value of new residential units: $371,468,000
  • Percentage increase in new residential units: +68.4%
  • Total increase in new residential dwellings: +2,449

Detailed results and methodology

To determine the metros with the largest increases in home construction, Construction Coverage researchers analyzed the latest data from the US Census Bureau. Building Permit Survey. The researchers ranked metropolitan areas by the value of authorized residential housing permits from January to April 2022 compared to the same period in 2021. The total increase in the value of new residential housing, the percentage increase in new residential dwellings and the total increase in the number of new residential dwellings was also calculated.

Only metropolitan areas with at least 100,000 inhabitants and a monthly coverage percentage of at least 90% in January 2021 were included in the analysis. In addition, metropolitan areas have been grouped into the following cohorts based on population size:

  • Small metros: 100,000 to 349,999
  • Mid-size metros: 350,000 to 999,999
  • Large metros: 1,000,000 or more

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