U.S. Cities With the Biggest Increase in Construction Spending Since COVID

More than a year into the COVID-19 pandemic, one of the biggest economic stories has been the red-hot residential real estate market. Housing inventory is at all-time lows, but low interest rates, government stimulus, increased household savings, and a growing number of first-time millennial homebuyers have led to strong demand nearly everywhere. Stories of fierce competition, bidding wars, and sales that close well above listing price are becoming common in markets all across the country.

When housing supply is low and demand is high, residential construction inevitably picks up as builders and developers try to meet demand. The same is true now. While disruption to global supply chains has driven up the price of building supplies like lumber, residential construction is booming.

Like many other sectors of the economy, residential construction took a sharp dip early on in the pandemic, when lockdowns and the accompanying economic uncertainty paused many activities. Since then, however, spending on residential construction has spiked. The seasonally adjusted annual rate hit a low of $547 billion in May 2020, recovered to pre-lockdown levels around $600 billion by August, and has topped $700 billion in every month since December.

While this trend of growth is evident nationwide, some areas are seeing the effects more so than others. In particular, the Midwest region of the U.S. has experienced the greatest increase in the value of new residential construction. From the first quarter of 2020 to the first quarter of 2021, the value of new residential building permits in the Midwest was up 38.1%.

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One reason for this might be the relative value of real estate in different regions. Homes are already more expensive on the coasts, which means fewer people can afford those markets even before factoring in the high demand and low inventory seen over the last year. In cheaper areas like those found in the Midwest, however, current housing market conditions have increased values by greater percentages, including for new builds. And these markets have taken on new appeal, with more people moving to locations where living space is less expensive after months of social distancing restrictions and with more employers transitioning to permanent work-from-home arrangements.

The two states that most strongly exemplify these trends are Wyoming and South Dakota, where the total value of new residential building permits is up 116% and 99%, respectively. At the other end of the spectrum, the list of states with the lowest growth in the value of new residential construction includes California, New Jersey, New York, and Massachusetts—some of the most expensive states for home values in the U.S.

Similar conditions hold at the metro level, as many lower-cost cities are experiencing increased interest in the housing market and new construction rushes to fill the demand. To find the locations where construction spending has increased the most during the pandemic, researchers at Construction Coverage analyzed data from the U.S. Census Bureau’s Building Permits Survey to rank the percentage change in value of new residential building permits authorized from Q1 2020 to Q1 2021.

Here are the U.S. metros with the biggest increase in residential construction spending since COVID.

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Large Metros With the Biggest Increase in Residential Construction Spending Since COVID

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15. Tucson, AZ

• Percentage change in value of new residential building permits: +39.0%
• Total change in value of new residential building permits: $122,056,000
• Value of units authorized in 2021 Q1: $434,855,000
• Value of units authorized in 2020 Q1: $312,799,000

Photo Credit: Alamy Stock Photo

14. Seattle-Tacoma-Bellevue, WA

• Percentage change in value of new residential building permits: +40.0%
• Total change in value of new residential building permits: $447,284,000
• Value of units authorized in 2021 Q1: $1,566,245,000
• Value of units authorized in 2020 Q1: $1,118,961,000

Photo Credit: Alamy Stock Photo

13. Oklahoma City, OK

• Percentage change in value of new residential building permits: +40.0%
• Total change in value of new residential building permits: $145,460,000
• Value of units authorized in 2021 Q1: $509,329,000
• Value of units authorized in 2020 Q1: $363,869,000

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12. Louisville-Jefferson County, KY-IN

• Percentage change in value of new residential building permits: +40.9%
• Total change in value of new residential building permits: $107,356,000
• Value of units authorized in 2021 Q1: $370,005,000
• Value of units authorized in 2020 Q1: $262,649,000

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11. Washington-Arlington-Alexandria, DC-VA-MD-WV

• Percentage change in value of new residential building permits: +43.8%
• Total change in value of new residential building permits: $481,536,000
• Value of units authorized in 2021 Q1: $1,580,427,000
• Value of units authorized in 2020 Q1: $1,098,891,000

Photo Credit: Alamy Stock Photo

10. Detroit-Warren-Dearborn, MI

• Percentage change in value of new residential building permits: +44.2%
• Total change in value of new residential building permits: $162,665,000
• Value of units authorized in 2021 Q1: $530,328,000
• Value of units authorized in 2020 Q1: $367,663,000

Photo Credit: Alamy Stock Photo

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

• Percentage change in value of new residential building permits: +45.8%
• Total change in value of new residential building permits: $436,576,000
• Value of units authorized in 2021 Q1: $1,390,128,000
• Value of units authorized in 2020 Q1: $953,552,000

Photo Credit: Alamy Stock Photo

8. Indianapolis-Carmel-Anderson, IN

• Percentage change in value of new residential building permits: +46.5%
• Total change in value of new residential building permits: $242,255,000
• Value of units authorized in 2021 Q1: $762,696,000
• Value of units authorized in 2020 Q1: $520,441,000

Photo Credit: Alamy Stock Photo

7. Richmond, VA

• Percentage change in value of new residential building permits: +46.8%
• Total change in value of new residential building permits: $131,657,000
• Value of units authorized in 2021 Q1: $413,146,000
• Value of units authorized in 2020 Q1: $281,489,000

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6. Buffalo-Cheektowaga, NY

• Percentage change in value of new residential building permits: +47.2%
• Total change in value of new residential building permits: $38,279,000
• Value of units authorized in 2021 Q1: $119,342,000
• Value of units authorized in 2020 Q1: $81,063,000

Photo Credit: Alamy Stock Photo

5. Kansas City, MO-KS

• Percentage change in value of new residential building permits: +47.9%
• Total change in value of new residential building permits: $212,433,000
• Value of units authorized in 2021 Q1: $655,471,000
• Value of units authorized in 2020 Q1: $443,038,000

Photo Credit: Alamy Stock Photo

4. Raleigh-Cary, NC

• Percentage change in value of new residential building permits: +52.5%
• Total change in value of new residential building permits: $455,262,000
• Value of units authorized in 2021 Q1: $1,321,977,000
• Value of units authorized in 2020 Q1: $866,715,000

Photo Credit: Alamy Stock Photo

3. Milwaukee-Waukesha, WI

• Percentage change in value of new residential building permits: +69.1%
• Total change in value of new residential building permits: $87,832,000
• Value of units authorized in 2021 Q1: $214,974,000
• Value of units authorized in 2020 Q1: $127,142,000

Photo Credit: Alamy Stock Photo

2. San Antonio-New Braunfels, TX

• Percentage change in value of new residential building permits: +80.8%
• Total change in value of new residential building permits: $559,661,000
• Value of units authorized in 2021 Q1: $1,252,208,000
• Value of units authorized in 2020 Q1: $692,547,000

Photo Credit: Alamy Stock Photo

1. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

• Percentage change in value of new residential building permits: +127.9%
• Total change in value of new residential building permits: $669,161,000
• Value of units authorized in 2021 Q1: $1,192,242,000
• Value of units authorized in 2020 Q1: $523,081,000

Detailed Findings & Methodology

To find the locations with the largest increase in construction spending since COVID, researchers at Construction Coverage analyzed data from the U.S. Census Bureau’s Building Permits Survey. Metropolitan areas were ranked according to the percentage change in value of new residential building permits authorized from Q1 2020 to Q1 2021.

Some building permit offices only report data to the Census Bureau annually, rather than monthly. As a result, the monthly data for certain metropolitan areas only includes a subset of total permits issued. To improve the accuracy of this analysis, only metropolitan areas in which at least 70% of all building permits are accounted for by offices that report monthly were included.

Additionally, metropolitan areas were grouped into size cohorts based on population: small (100,000–349,999); midsize (350,000–999,999); and large (more than 1,000,000). Metros with fewer than 100,000 residents were excluded.