Home construction across the United States is slowing down—and the timing couldn’t be worse.
The country is already at its lowest point in a decade for housing affordability, due largely to the shortage of homes on the market. In February this year, according to U.S. Census Bureau data, 9.9% fewer homes than a year ago had been started but not yet completed. The lack of newly constructed homes is only exacerbating the crisis.
But hold on! There are still a number of markets in the country where foundations are being poured, frames are being erected, and contractors are contracting, everywhere you look. The realtor.com® data team went out and identified these boom towns for new construction. These tend to be high-demand metropolitan areas* with plentiful gigs, lots of amenities, and ample room to grow.
They’re also wise investments for home buyers.
“Adding new homes is key to a city’s economic health,” says Robert Dietz, chief economist of the National Association of Home Builders. Much of the new construction he’s seeing is in the South and Southwest, where land and construction labor is cheaper and there are fewer costly and time-consuming building regulations. (New York City and Los Angeles, our outliers, made the list simply because they’re so darn big.)
Despite the fact that new homes tend to be more expensive than existing ones—about 26% pricier, thanks to high labor, materials and land costs—they help to keep runaway home prices at least somewhat in check by providing buyers with more options. It’s the housing circle of life: “Markets that add inventory keep housing affordable and in turn attract more businesses and startups in those areas,” says Dietz.
To come up with our findings, we analyzed census data to figure out where builders scored the most residential construction permits. The permits are for single-family homes, condos and co-ops, apartments, townhouses, and duplexes. They’re not an iron-clad guarantee that new housing will be completed an average of seven months later. But they’re the best indication that it will.
So where is building booming?
Median list price: $335,700
Number of permits: 63,421
One-year change in permits: 2.8%
Big companies, like Toyota, are relocating or expanding into the Big D at a breakneck pace, ushering in a torrent of new residents. That’s kept builders busy.
Unlike the coasts, this large metro area has lots of relatively inexpensive land available for development. Plus, Texas is known for its builder-friendly laws and regulations, and some of the area’s northern suburbs and smaller cities are big-time beneficiaries. Frisco, 40 minutes from downtown Dallas, has tons of new 4,000-square-foot two-story houses with big yards. It was named the third fastest-growing suburb by realtor.com last year.
And buyers here don’t have to be millionaires to own new homes.
“We’ve hit a ceiling with how high price appreciation can go up,” says Ted Wilson, principal at Residential Strategies, a real estate market research firm in Dallas. “So builders over the past two years are trying to get more in the affordable price points: $250,000 to $350,000. That range is the name of the game right now.”