The South And West Lead The Way In Housing Construction

Real Estate

Builder confidence in the market for newly-built single-family homes remains strong thanks to low mortgage rates and positive job growth. Home building jumped in October by 3.8%, the strongest pace since the beginning of the year, largely because of construction in the West and South.

On Tuesday, Lawrence Yun, chief economist of the National Association of Realtors and fellow Forbes.com contributor, said the issuance of housing permits booming ahead to their highest level in over a decade is “tremendously good news for the housing sector,” explaining that “permits are just paper, while housing starts are shovels in the ground — and permits generally lead starts.”

Yun added, “At 1.46 million units on an annualized basis, housing permits are nearly to the level needed for the country over the long haul. Since new home construction kicks off the chain reaction of people trading up and trading down by buying new and selling their existing homes, more housing inventory will surely show up in the market next year.”

To get a better idea of which cities are authorizing building permits for the highest-value homes, apartments and other residences, Apartment Guide explored building permits survey data from the U.S. Census Bureau, analyzing all new residential building permits filed in over 360 metropolitan areas from 1994 to July 2019. 

Here’s what Apartment Guide discovered: Although the South is home to just 38.1% of Americans, 51.9% of all building permits were for Southern residences. Similarly, 23.8% of Americans live in the West, yet 25.4% of all new residential construction was planned for that region. This may signify population growth in these areas. Between 2017 and 2018, the South and West had the fastest-growing cities nationwide, while numerous cities in the West were named some of the best places to find a job in 2019.

The average value of a newly-constructed single family home is roughly $245,000. The seaside cities of Honolulu, Sebastian-Vero Beach, Florida and Crestview-Fort Walton Beach-Destin, Florida, saw the greatest increases in the average valuation of new single-family homes between 2018 and 2019.

In the first half of 2019, the South saw the highest number of new housing units authorized with a total of 401,814. Western states were home to 196,610 new residences, while the Midwest and Northeast saw the fewest with 101,245 and 73,898, respectively. 

When comparing residential growth to the population, the Raleigh-Cary metropolitan area in North Carolina had the most residential properties breaking ground. Raleigh-Cary issued the most building permits,145, for residential units in 2019. The population in this metro area has recently skyrocketed, increasing by 39% more residents in less than five years. 

While certain Texas cities saw declines in the value of new construction, there seemed to be no slowing down for the number of new homes constructed in some regions of the Lone Star State. The Houston metropolitan area is becoming a construction boom town. As of July 2019, more than 36,000 building permits were issued for new residential units, the most of any metropolitan area in the country.

The Dallas-Fort Worth-Arlington area wasn’t too far behind, with 34,523 building permits issued as of July 2019. These metropolitan areas are likely seeing construction increase due to a spike in job growth. Between August of 2018 and August of 2019, the Dallas-Fort Worth-Arlington metro area saw a 3.1% increase in employment, more than twice the national rate of 1.4%.

The seaside cities of Honolulu; Sebastian-Vero Beach, Florida; and Crestview-Fort Walton Beach-Destin, Florida saw the greatest increases in the average valuation of new single-family homes between 2018 and 2019. These changes could influence how much homeowners charge if they choose to rent out their properties.

While new homes aren’t being built at equal rates across the country, cities with lower construction rates might be building more expensive homes. The Urban Honolulu, Hawaii, metropolitan area, for example, had the highest value per new construction in 2019, with the average value of a single-family home reaching $396,800. Numerous cities in Florida and California also saw high estimated values, the highest of which averaged over $391,000 per single-family home.

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