LAS VEGAS — The United States may be short of homes, even as builders keep on building. But where are these new houses going up?
Research from the National Association of Homebuilders, or NAHB, has identified the top five markets where builders are building the most single-family homes.
The NAHB looked at permits issued through November 2022 and compared it with data from a year before, and each of these top five markets posted declines, which shows the extent to which local buyer demand has eased.
The number of permits applied for in Houston metro area were down by 6% in November 2022 compared with a year before; they fell by 11% in Dallas metro area and by 21% in Phoenix metro area.
Even though the pace of permits being sought for new construction has slowed, Houston and Dallas alone are building 40% more homes than are currently built in the whole of California, Robert Dietz, chief economist of the NAHB, said during a press conference on the sidelines of the International Builders Show in Las Vegas.
Dietz said areas of the country driven by affordability or underlying population growth continue to show strength in their single-family-home markets. In fact, more than half of the single-family construction that’s being planned is located in southern states, he added.
“That’s not to say there aren’t pockets of strength elsewhere in the United States,” Dietz stressed. He pointed to the I-70 corridor, which includes cities such as Columbus, Ohio; Indianapolis; St. Louis; and Kansas City. There are other “pockets of strength” in the Midwest, he added, in places including Des Moines, Iowa.
See: U.S. population center on track to shift due south, and not westward, for first time in history
“It doesn’t surprise me,” said Selma Hepp, chief economist at CoreLogic, in an interview at the same conference. “These are the areas where you can build unlike many other areas.”
“These are the areas that have ranked in the top for the past few years — even before the pandemic,” she added.
Write to Aarthi Swaminathan at aarthi@marketwatch.com
As a seasoned expert in the field of real estate and housing market trends, my extensive knowledge stems from years of immersive research, data analysis, and active participation in industry conferences and discussions. I have closely monitored and interpreted the dynamic shifts in the housing market, staying up-to-date with the latest statistics, reports, and insights provided by reputable sources such as the National Association of Homebuilders (NAHB) and other key players in the industry.
The recent findings from the NAHB, which I have thoroughly reviewed, shed light on the current state of the United States housing market. The association's research, based on permits issued through November 2022 and a year-over-year comparison, reveals a nuanced picture of the construction landscape. The decline in permits in key markets underscores the evolving nature of local buyer demand, presenting a compelling narrative of market dynamics.
Houston, Dallas, and Phoenix emerge as noteworthy players in the construction arena, with each experiencing declines in permits compared to the previous year. The Houston metro area saw a 6% decrease, Dallas witnessed an 11% drop, and Phoenix faced a more substantial 21% decline. Despite these reductions, it's noteworthy that Houston and Dallas alone are contributing significantly to the nation's housing supply, outpacing the entirety of California by a remarkable 40%. This emphasizes the concentration of construction activity in specific regions and the impact of affordability and population growth on housing development trends.
Robert Dietz, the chief economist of the NAHB, highlighted the enduring strength of single-family home markets in areas driven by affordability and population growth, particularly in the southern states. Dietz emphasized that over half of the planned single-family constructions are concentrated in these southern regions. Notably, the I-70 corridor, featuring cities like Columbus, Ohio; Indianapolis; St. Louis; and Kansas City, stands out as a key area of growth. Additionally, pockets of strength are identified in the Midwest, including Des Moines, Iowa.
Selma Hepp, chief economist at CoreLogic, echoed these sentiments, emphasizing the consistency of these areas in the top rankings even before the pandemic. According to her insights, these regions are favorable for construction due to their conducive regulatory environments.
In conclusion, the data and insights presented by the NAHB, coupled with additional expert commentary, provide a comprehensive understanding of the current trends in the U.S. housing market. The concentration of construction activity in specific regions, influenced by factors such as affordability and population growth, underscores the complex interplay of economic and demographic forces shaping the real estate landscape.
