With mortgage rates up and demand for new single-family homes at historic lows, investors are paying close attention to new residential construction this year.
Residential building permits and housing starts are two widely used indicators of the broader health of the economy. Increased demand for new homes nationally, and in specific geographic areas, can be a sign of economic prosperity and job growth. Likewise, weak demand can be indicative of a slowdown.
According to the U.S. Census Bureau, construction broke ground on a record 2.2 million new residential housing units in 2005, or about 74 units per 10,000 residents. Almost 80 percent of those new units were single-family homes. By 2009, at the height of the recession, permits for new home projects plummeted below 600,000 to an annual rate of 19 new units per 10,000 residents.
Since then, building permits for new residential units has more than doubled nationally; however, the current per capita rate of 40 units per 10,000 residents is still far-below its pre-recession peak. The failure of new-single family home construction to rebound is largely responsible.
In some cities, strong local economies and growing populations is fueling a surge in new home construction that far outpaces the national average. To identify the metropolitan areas investing the most in new housing, researchers at Construction Coverage, a review website for software and financial products in the construction industry, analyzed the most recent data from the U.S. Census Bureau Building Permit Survey. For each major metropolitan area, Construction Coverage calculated the number of building permits issued per capita for the trailing 12 months and compared that to the national average. The researchers also looked at changes in population, employment, earnings, and home values over the same time period to identify potential trends, which are listed below.
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Notable Trends
- Looking at the most recent trailing 12 months of data, builders across the U.S. were on pace to construct approximately 40 new residential units per 10,000 residents. In the largest 100 metros, the range in per capita residential construction was wide—from just below one unit per 10,000 residents to a high of more than 130.
- Population and employment growth are strongly correlated with new housing development. Metros with the most per capita residential construction projects are significantly more likely to have strong employment and population growth as well.
- Changes in home value based on the Zillow Home Price Index are also positively correlated with investment in residential real estate projects—though not as strong as the employment and population correlations listed above. Metros investing the most in new housing are also more likely to have above average increases in home value year-over-year.
- Unlike employment and population growth, changes in median earnings are not correlated with new housing investment. Among the top metros listed below, year-over-year earnings growth is varied. This is consistent with the broader national trend: that despite strong employment growth, decreasing unemployment, and increasing home prices, wages have failed to adjust accordingly.
Cities Investing the Most in New Housing
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25. Portland-Vancouver-Hillsboro, OR-WA
- New housing units (per 10k residents): 62.7
- Total new housing units: 6,956 single-family / 8,406 multi-unit
- Total valuation of new projects: $3.14 billion
- 1-year population growth: 1.10%
- 1-year employment growth: 2.40%
- 1-year home value growth: 4.80%
Photo Credit: Sean Pavone / Alamy Stock Photo
24. Atlanta-Sandy Springs-Roswell, GA
- New housing units (per 10k residents): 63.4
- Total new housing units: 26,293 single-family / 10,984 multi-unit
- Total valuation of new projects: $7.11 billion
- 1-year population growth: 1.60%
- 1-year employment growth: 2.10%
- 1-year home value growth: 13.30%
Photo Credit: Joe Ferrer / Alamy Stock Photo
23. Madison, WI
- New housing units (per 10k residents): 66.3
- Total new housing units: 1,606 single-family / 2,732 multi-unit
- Total valuation of new projects: $884 million
- 1-year population growth: 0.80%
- 1-year employment growth: 1.50%
- 1-year home value growth: 4.20%
Photo Credit: Jose Vilchez / Alamy Stock Photo
22. Lakeland-Winter Haven, FL
- New housing units (per 10k residents): 66.7
- Total new housing units: 4,578 single-family / 0 multi-unit
- Total valuation of new projects: $924 million
- 1-year population growth: 3.10%
- 1-year employment growth: 3.80%
- 1-year home value growth: 8.70%
Photo Credit: Andriy Kravchenko / Alamy Stock Photo
21. Salt Lake City, UT
- New housing units (per 10k residents): 67.1
- Total new housing units: 5,545 single-family / 2,522 multi-unit
- Total valuation of new projects: $1.70 billion
- 1-year population growth: 1.40%
- 1-year employment growth: 2.20%
- 1-year home value growth: 11.10%
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20. Phoenix-Mesa-Scottsdale, AZ
- New housing units (per 10k residents): 67.2
- Total new housing units: 22,696 single-family / 9,138 multi-unit
- Total valuation of new projects: $7.05 billion
- 1-year population growth: 1.60%
- 1-year employment growth: 4.20%
- 1-year home value growth: 7.60%
Photo Credit: Pete Saloutos / Alamy Stock Photo
19. Seattle-Tacoma-Bellevue, WA
- New housing units (per 10k residents): 68.7
- Total new housing units: 9,118 single-family / 17,452 multi-unit
- Total valuation of new projects: $5.39 billion
- 1-year population growth: 1.80%
- 1-year employment growth: 3.50%
- 1-year home value growth: 5.60%
Photo Credit: Aurora Photos / Alamy Stock Photo
18. Denver-Aurora-Lakewood, CO
- New housing units (per 10k residents): 69.6
- Total new housing units: 12,111 single-family / 7,997 multi-unit
- Total valuation of new projects: $4.53 billion
- 1-year population growth: 1.20%
- 1-year employment growth: 2.10%
- 1-year home value growth: 6.40%
Photo Credit: Sean Pavone / Alamy Stock Photo
17. Greenville-Anderson-Mauldin, SC
- New housing units (per 10k residents): 70.9
- Total new housing units: 4,905 single-family / 1,449 multi-unit
- Total valuation of new projects: $1.75 billion
- 1-year population growth: 1.20%
- 1-year employment growth: 1.00%
- 1-year home value growth: 8.50%
Photo Credit: Sean Pavone / Alamy Stock Photo
16. Houston-The Woodlands-Sugar Land, TX
- New housing units (per 10k residents): 77.7
- Total new housing units: 40,325 single-family / 13,252 multi-unit
- Total valuation of new projects: $9.02 billion
- 1-year population growth: 1.80%
- 1-year employment growth: 3.70%
- 1-year home value growth: 6.60%
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15. Charleston-North Charleston, SC
- New housing units (per 10k residents): 83.2
- Total new housing units: 4,704 single-family / 1,753 multi-unit
- Total valuation of new projects: $1.51 billion
- 1-year population growth: 1.9%
- 1-year employment growth: 2.2%
- 1-year home value growth: 7.10%
Photo Credit: Neil Podoll / Alamy Stock Photo
14. Colorado Springs, CO
- New housing units (per 10k residents): 84.1
- Total new housing units: 4,275 single-family / 1,810 multi-unit
- Total valuation of new projects: $1.89 billion
- 1-year population growth: 1.6%
- 1-year employment growth: 5.0%
- 1-year home value growth: 9.40%
Photo Credit: Sean Pavone / Alamy Stock Photo
13. Dallas-Fort Worth-Arlington, TX
- New housing units (per 10k residents): 85.0
- Total new housing units: 36,607 single-family / 26,280 multi-unit
- Total valuation of new projects: $12.99 billion
- 1-year population growth: 2.3%
- 1-year employment growth: 2.6%
- 1-year home value growth: 11.20%
Photo Credit: Dave Newman / Alamy Stock Photo
12. Des Moines-West Des Moines, IA
- New housing units (per 10k residents): 86.4
- Total new housing units: 3,278 single-family / 2,304 multi-unit
- Total valuation of new projects: $1.15 billion
- 1-year population growth: 1.8%
- 1-year employment growth: 2.5%
- 1-year home value growth: 5.90%
Photo Credit: Sean Pavone / Alamy Stock Photo
11. Jacksonville, FL
- New housing units (per 10k residents): 91.3
- Total new housing units: 10,864 single-family / 2,873 multi-unit
- Total valuation of new projects: $3.04 billion
- 1-year population growth: 1.8%
- 1-year employment growth: 1.7%
- 1-year home value growth: 9.60%
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10. Charlotte-Concord-Gastonia, NC-SC
- New housing units (per 10k residents): 93.6
- Total new housing units: 14,955 single-family / 8,674 multi-unit
- Total valuation of new projects: $4.58 billion
- 1-year population growth: 2.1%
- 1-year employment growth: 2.3%
- 1-year home value growth: 11.50%
Photo Credit: Sean Pavone / Alamy Stock Photo
9. Nashville-Davidson–Murfreesboro–Franklin, TN
- New housing units (per 10k residents): 95.0
- Total new housing units: 12,356 single-family / 5,727 multi-unit
- Total valuation of new projects: $3.66 billion
- 1-year population growth: 2.1%
- 1-year employment growth: 2.2%
- 1-year home value growth: 9.30%
Photo Credit: Sean Pavone / Alamy Stock Photo
8. Durham-Chapel Hill, NC
- New housing units (per 10k residents): 95.7
- Total new housing units: 3,358 single-family / 2,075 multi-unit
- Total valuation of new projects: $994 million
- 1-year population growth: 1.4%
- 1-year employment growth: 2.0%
- 1-year home value growth: 8.40%
Photo Credit: Sean Pavone / Alamy Stock Photo
7. Orlando-Kissimmee-Sanford, FL
- New housing units (per 10k residents): 113.1
- Total new housing units: 16,041 single-family / 12,338 multi-unit
- Total valuation of new projects: $4.99 billion
- 1-year population growth: 2.8%
- 1-year employment growth: 4.8%
- 1-year home value growth: 9.70%
Photo Credit: Aurora Photos / Alamy Stock Photo
6. Provo-Orem, UT
- New housing units (per 10k residents): 118.7
- Total new housing units: 5,542 single-family / 1,789 multi-unit
- Total valuation of new projects: $1.73 billion
- 1-year population growth: 2.5%
- 1-year employment growth: 4.2%
- 1-year home value growth: 15.40%
Photo Credit: Charles Knowles / Alamy Stock Photo
5. Boise City, ID
- New housing units (per 10k residents): 122.3
- Total new housing units: 6,934 single-family / 1,755 multi-unit
- Total valuation of new projects: $1.78 billion
- 1-year population growth: 2.9%
- 1-year employment growth: 2.6%
- 1-year home value growth: 15.30%
Photo Credit: Paul Sosebee / Alamy Stock Photo
4. Cape Coral-Fort Myers, FL
- New housing units (per 10k residents): 124.1
- Total new housing units: 5,672 single-family / 3,505 multi-unit
- Total valuation of new projects: $1.80 billion
- 1-year population growth: 2.3%
- 1-year employment growth: 3.3%
- 1-year home value growth: 3.80%
Photo Credit: Sean Pavone / Alamy Stock Photo
3. Raleigh, NC
- New housing units (per 10k residents): 125.9
- Total new housing units: 11,089 single-family / 5,721 multi-unit
- Total valuation of new projects: $2.88 billion
- 1-year population growth: 2.5%
- 1-year employment growth: 2.8%
- 1-year home value growth: 6.40%
Photo Credit: Sean Pavone / Alamy Stock Photo
2. North Port-Sarasota-Bradenton, FL
- New housing units (per 10k residents): 131.9
- Total new housing units: 6,269 single-family / 4,345 multi-unit
- Total valuation of new projects: $2.06 billion
- 1-year population growth: 2.1%
- 1-year employment growth: 2.3%
- 1-year home value growth: 5.30%
Photo Credit: Eva Hawker / Alamy Stock Photo
1. Austin-Round Rock, TX
- New housing units (per 10k residents): 137.1
- Total new housing units: 16,678 single-family / 12,325 multi-unit
- Total valuation of new projects: $5.05 billion
- 1-year population growth: 2.9%
- 1-year employment growth: 3.3%
- 1-year home value growth: 6.50%
Methodology & Full Results
Data on new housing units and valuation is from the U.S. Census Bureau Building Permits Survey. The survey includes new single-unit and multi-unit housing projects authorized by building permits at the metropolitan area level. The analysis considered the most recent trailing 12 months of data, which spans from November 2017 through October of 2018.
For each metropolitan area, the number of new housing units was divided by the total resident population to yield the New housing units per 10k residents statistic. This statistic was used to rank the metros and determine those investing the most in new housing.
Population data is from the U.S. Census Bureau 2017 American Community Survey 1 Year Estimates. Employment data is from the U.S. Bureau of Labor Statistics Current Employment Statistics program and home values are from Zillow. Year-over-year employment and home value changes were calculated between November 2017 and November 2018. The population change was calculated between 2016 and 2017 (the most recent data available).