New Home Permits Down Despite Market Need

While the small increase in the number of new homes hitting the market in 2023 could seem encouraging, it’s still underwhelming given the current housing shortage and increasing demand, according to Point2, an international real estate search portal, a division of Yardi Systems Inc. Last year, 1,450,000 new homes were made available for buyers and renters in the U.S. This number is still below the 1.5 million homes per year that was the norm in the 2000s.

It takes 400 tons of aggregates to construct the average modern home, according to the National Stone, Sand & Gravel Association.

The undersupply of new homes is made worse by the decrease in starts and permits. Last year, developers broke ground on 1,420,000 new homes, which is a 9% drop compared to 2022. Permits are following the same downward path: For the second year in a row, the number of authorizations for new homes is falling. 

What follows is an overview of permits and new construction data, as well as employment, income and business data at the national level, but also at state and metro level, including all 384 existing U.S. metros.

  • The total number of completed homes went up last year due to the 22% increase in multifamily units, which compensated for the 2% decrease in new single family homes.
  • In 2023, permits fell for the second year in a row: Last year’s 11% drop followed the 5% drop from 2021.
  • Like permits, total started units fell in 2023, by 9%. Similar to the negative trend in permitting activity, 2023 was the second year when builders broke ground on fewer homes compared to the previous year.
  • The South took the lead with the most permits issued (821,600), followed by states in the West (344,500), the Midwest (190,200) and the Northeast (114,300).
  • The top three states hoping to build the most in the near future are Texas, Florida and California, all boasting numbers of permits higher than 100,000 and even more than 200,000.
  • On the other hand, in 18 states, less than 10,000 permits were issued per state, with Alaska authorizing less than 1,000 new homes.
  • Of the 384 total U.S. metros, permits fell in 266 and increased or stagnated in 118.

Access full information from Point2 here.

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