Where Is New Construction Creating Affordable Housing Options? Look to the South and the West

Rhea-AI Summary

Realtor.com's new report, 'New Construction Insights', reveals that South Carolina, North Carolina, and Idaho are leading in new home construction, considering volume, affordability, and future growth. The top ten states for new construction are predominantly in the South and West regions. Nationwide, new home prices are lower than existing homes and have decreased significantly since July 2022. Builders are responding to affordability concerns by constructing smaller, more affordable homes. Homes built in 2024 are 8% smaller (163 sq ft) than those built in 2022. The report highlights a supply shortage of over 7 million single-family homes at the end of 2023, emphasizing the need for new construction to meet housing demand and contribute to economic activity.

Positive

• South Carolina, North Carolina, and Idaho lead in new home construction activity and affordability
• New home prices are lower than existing homes and have decreased since July 2022
• Builders are constructing smaller, more affordable homes to meet demand
• New construction is helping to address the supply shortage of over 7 million single-family homes

Negative

• Supply shortage of over 7 million single-family homes at the end of 2023
• Homes built in 2024 are 8% smaller than those built in 2022, potentially affecting buyer preferences

• A New Report from Realtor.com found South Carolina, North Carolina and Idaho are the top three states leading the new construction activity and affordability rankings
• New Construction Nationally is Helping Add Needed Inventory and Affordable Options

SANTA CLARA, Calif., Sept. 18, 2024 /PRNewswire/ -- Today, Realtor.com^® launched a brand new report "New Construction Insights," which found South Carolina, North Carolina and Idaho lead the way when it comes to new home construction. This report creates a ranking for states looking at volume, affordability, and future growth of the new construction inventory and found that the top ten states are located South or West regions with the Carolinas leading the way.

"This will come as no surprise as the South and West have the fastest growing overall levels of inventory," said Joel Berner, senior Economist, Realtor.com^® "For prospective buyers interested in purchasing a newly built home, these ten states have more newly built options that are more affordable, and fastest-growing. In other parts of the country, purchasing a newly built home may be more challenging until new construction activity picks up."

Top Ten States for New Construction Activity and Affordability

	New Construction as a Share of Total Listings Rank	New Construction Premium per Square Foot Rank	Permits per Capita Rank	Average Rank
South Carolina	4	2	2	2.67
North Carolina	1	6	3	3.33
Idaho	3	9	1	4.33
Arizona	10	5	5	6.67
Utah	5	13	7	8.33
Florida	20	3	4	9.00
Delaware	2	18	8	9.33
Texas	6	15	9	10.00
Tennessee	8	16	10	11.33
Georgia	9	14	12	11.67

*Each state is ranked according to three criteria: the share of listings in each state that are new builds, the price per square foot premium on those new builds versus existing home listings (ranked lowest to highest), and the number of permits for new single-family homes per capita issued in each state. Rankings are then averaged to get a sense of the volume, affordability, and future growth of the new construction inventory.

Across the United States, new home prices are lower than existing homes and down considerably from the peak in July of 2022. Affordability of new homes is largely driven by builders who are building smaller and more affordable homes to meet the demand. For example, homes built in 2024 are 8% smaller or 163 sq ft smaller, which is roughly a 12X12ft room, than homes built in 2022. However, new builds are still bigger than most existing homes

"Nationwide, builders have responded to the gap in existing home affordability by building smaller, lower-priced homes and are a major driver of this year's leveling-off of listing prices," said Joel Berner, senior Economist, Realtor.com^®. "In the years since the Great Recession, the pace of household formation in the United States has far exceeded the rate of homebuilding, resulting in a supply shortage of over 7 million single-family homes at the end of 2023. There is a clear and present need for newly built homes to meet the demand for housing, and this construction is an important contributor to overall economic activity."

This report was launched as a part of the Realtor.com's New Construction Days of Deals event, to learn more visit: https://www.realtor.com/new-construction-days-of-deals and to learn more from our economics team, visit our site https://www.realtor.com/research/

Methodology
Realtor.com housing data as of August 2024. Listings include the active inventory of newly built single-family homes and condos/townhomes/row homes/co-ops for the given level of geography on Realtor.com. Realtor.com data history goes back to July 2016. For the permits per capita criterion of the state rankings, permitting and population data come from the most recent releases by the US Census Bureau.

About Realtor.com^®
Realtor.com^® is an open real estate marketplace built for everyone. Realtor.com^® pioneered the world of digital real estate more than 25 years ago. Today, through its website and mobile apps, Realtor.com^® is a trusted guide for consumers, empowering more people to find their way home by breaking down barriers, helping them make the right connections, and creating confidence through expert insights and guidance. For professionals, Realtor.com^® is a trusted partner for business growth, offering consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com^® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. For more information, visit Realtor.com^®.

Media Contact: Mallory Micetich, press@realtor.com

View original content:https://www.prnewswire.com/news-releases/where-is-new-construction-creating-affordable-housing-options-look-to-the-south-and-the-west-302251093.html

SOURCE Realtor.com

FAQ

Which states are leading in new home construction according to Realtor.com's report?

According to Realtor.com's 'New Construction Insights' report, South Carolina, North Carolina, and Idaho are leading in new home construction, considering volume, affordability, and future growth.

How do new home prices compare to existing homes in 2024?

As of 2024, new home prices are lower than existing homes and have decreased significantly since their peak in July 2022.

How are builders addressing affordability concerns in the housing market?

Builders are addressing affordability concerns by constructing smaller, more affordable homes. Homes built in 2024 are 8% smaller (163 sq ft) than those built in 2022.

What is the current supply shortage of single-family homes in the United States?

According to the report, there is a supply shortage of over 7 million single-family homes in the United States as of the end of 2023.