All eyes are on the housing market as mixed signals continue to confound homebuyers, sellers, and economists alike. Soaring mortgage rates have taken the blame for housing unaffordability. However, there is a fundamental imbalance at the heart of the affordability crisis: inventory.
The US is in a housing shortage, with an estimated deficit of 6.5 million homes. And while there is a demonstrated need for more housing, the same financial pressures that are driving up mortgage rates are also making it harder for homebuilders to finance their new construction projects.
In August, housing starts (i.e. housing projects that began construction) fell, but permits issued for new construction homes were up month-over-month. In other words, while the number of new single-family homes that started construction in August was lower than what it was in July 2023 and August 2022, the number of permits issued for single-family homes to begin construction was higher than in July 2023.
That’s good news for homebuyers, as more new construction signals possible relief for the shortage of homes for sale — one of the most pervasive headwinds to housing affordability — and provides an outlet for buyers who have been looking for homes to no avail.
New construction homes aren’t spread evenly across the United States. Orchard’s analysis of new-build permits shows that the majority of development is grouped across the South and West. These are the cities with the most new build permits issued in 2023 so far.
This year 29,687 permits have been issued for single-family units in Greater Houston, including more than 4,100 permits in July alone. This is especially staggering when compared to Chicago — the metro area closest to Houston in population size. This year, Chicago has only issued 4,380 single-family permits to date.
The Houston Metro Area covers a vast area in southeastern Texas, including the city of Houston, The Woodlands, and Sugar Land. The region boasts a diverse cultural scene, excellent healthcare facilities, and a rich culinary landscape. Its warm climate and strong job market have contributed to the area’s growth — between July 2021 and July 2022, Greater Houston is estimated to have added 124,281 residents.
DFW has issued 24,088 single-family unit permits to date, with more than 3,500 of those issued in July. These units have a combined valuation of more than $6.9 billion, for an average of $288,769.18 per project.
The Dallas-Fort Worth Metroplex in North Texas combines the cities of Dallas, Fort Worth, and Arlington. This sprawling urban region is a hub for technology, finance, and healthcare industries. The area added an estimated 170,396 residents in 2022 alone.
More than 50% of the new build permits for the state of Georgia have been issued for the greater Atlanta metro area, which accounts for 14,417 of the state’s 26,391 permits issued in 2023.
The Atlanta Metro Area, anchored by the state’s capital, includes Sandy Springs and Alpharetta. It is home to more than 6.2 million residents. The area is marked by its diverse economy, including major corporations, film and entertainment industries, and a thriving arts scene. The region's excellent educational institutions and quality of life make it a popular place to live and work.
More than 13,000 permits have been issued in the greater Phoenix metro area in 2023 — a whopping 72% of all permits issued for the state. The average valuation for these projects comes in at roughly $293,000, which is slightly higher than the average $289,000 average valuation of our list.
The Phoenix Metro Area extends across the Valley of the Sun, including cities like Mesa and Chandler. The area is known for its desert climate and stunning landscapes. Phoenix is home to more than 5 million residents and counting — with a growing tech sector, affordable housing, and a vibrant cultural scene, the area is attracting young professionals and retirees alike.
The greater Charlotte metro area approved permits for 11,174 new construction homes so far in 2023. That’s three times as many as the slightly smaller (by population) Portland metro area — which approved only 3,633 permits for single-family homes to date. For comparison, Charlotte-Concord-Gastonia is home to 2.8 million residents, while the Portland metro area is home to 2.5 million residents.
Greater Charlotte spans the border of North and South Carolina, including Charlotte, Concord, and Gastonia. It's a rapidly growing financial and commercial center, anchored by major banks like Bank of America. Residents enjoy a thriving job market, a bustling Uptown district, and proximity to the beautiful Blue Ridge Mountains. In 2022, the area added an estimated 48,700 residents.
Over 10,000 permits have been issued for the greater Orlando area. While Orlando has the highest concentration of new construction homes of any metro area in the state, Florida as a whole has approved permits for over 71,000 single-family homes in 2023 alone — the second highest of any state, trailing only Texas, which has approved over 84,000 permits for single-family homes to date.
The Orlando Metro Area, known as the "Theme Park Capital of the World," includes Orlando, Kissimmee, and Sanford. It's a tourist hotspot with attractions like Walt Disney World and Universal Studios, but the local population is also booming — adding 64,983 residents in 2022. The region's economy is heavily influenced by tourism and hospitality, but also offers a growing tech sector, a sunny climate, and a range of entertainment options, making it a popular destination for both tourists and residents.
The greater Austin area accounts for 11% of the permits for single-family homes in Texas issued in 2023 or just over 9,200 of the state’s 84,000 total. The valuation of these builds clocks in at just under $293,000 — slightly higher than the average for all metro areas.
The Austin Metro Area, encompassing Austin, Round Rock, and Georgetown, is a tech and cultural hub known for its live music scene, vibrant food culture, and outdoor activities. It's home to major tech companies and startups, earning it the nickname "Silicon Hills." The region's diverse and highly educated workforce, along with its quality of life, continues to attract young professionals and entrepreneurs. In 2022, the area added 64,983 residents.
The Nashville metro area approved 8,669 permits for single-family home construction to date this year, or nearly 46% of all permits of that kind issued in Tennessee. The average valuation of these projects came out to $314,400 — well above the $289,000 average for our list.
The Nashville Metro Area, comprising Nashville, Davidson, Murfreesboro, and Franklin, is renowned for its country music heritage. It's a thriving cultural and business center with a growing healthcare and tech sector. Residents enjoy a blend of Southern charm, live music venues, and historic landmarks like the Grand Ole Opry. Nashville's diverse economy and strong job market have contributed to its rapid growth — the area added 35,624 residents in 2022.
More than 8,000 permits were issued in Greater Tampa for new construction single-family homes in 2023, accounting for 11% of all single-family home permits issued in Florida this year.
The Tampa Bay Metro Area, including Tampa, St. Petersburg, and Clearwater, is situated along Florida's Gulf Coast. It is home to roughly 3.3 million residents, offering a mix of urban and coastal living, with beautiful beaches and a thriving arts scene. The region's economy is diverse, with sectors like healthcare, finance, and tourism playing key roles. Tampa's warm climate, recreational opportunities, and affordability make it an attractive place to live and work.
Single-family homes accounted for just over 60% of permits issued in Raleigh-Cary in 2023 — coming out to just over 7,600 permits. The valuation of these projects came out to an average of $260,200 — just below the average of $289,000 on our list.
The Raleigh Metro Area, centered around Raleigh and Cary, is part of North Carolina's Research Triangle region. It's known for its concentration of technology companies, research institutions, and universities. The area offers a high quality of life, a strong job market, and a vibrant cultural scene. The allure of outdoor activities, educational opportunities, and a growing tech sector have contributed to the area’s growth — adding 32,870 residents in 2022.
This metro area issued 7,490 permits for single-family home construction in 2023 — accounting for roughly 22% of single-family home building permits issued in the state.
The Riverside-San Bernardino Metro Area, located in Southern California, includes Riverside, San Bernardino, and Ontario. It's part of the Inland Empire and is known for its affordability compared to coastal California cities. The region is marked by a diverse economy, including logistics, healthcare, and manufacturing. In 2022, it added 21,498 residents.
As the most populous metropolitan area in the country, you might think Greater New York would be higher on the list. The area issued only 7,213 for single-family homes in 2023. However, the area has issued over 16,843 permits for new construction buildings with five or more units in 2023 — the highest number of any metro area on our list.
The New York Metro Area is one of the world's most iconic and expansive, including New York City, Newark, and Jersey City, spanning parts of New York, New Jersey, and Pennsylvania. It's a global financial, cultural, and media hub, offering endless opportunities for business, entertainment, and education. The area is characterized by its skyscrapers, diverse neighborhoods, world-class museums, and international cuisine, making it a truly cosmopolitan destination, and is home to more than 19 million people.
In 2023, Jacksonville approved 7,023 permits for single-family homes — making room for only 20% of the 34,642 residents that moved to the area in 2022.
The Jacksonville Metro Area, located in northeastern Florida, encompasses Jacksonville, known for its picturesque riverfront and Atlantic Ocean beaches. It's Florida's largest city by land area and offers a mix of urban and suburban living. The region's economy is diverse, with sectors like logistics, healthcare, and finance playing significant roles. Jacksonville's warm climate, waterfront attractions, and affordable housing options make it an appealing place to reside.
Greater Los Angeles has issued 6,977 permits to date in 2023, accounting for roughly 20% of the 33,936 permits issued in the state of California in 2023.
The Los Angeles Metro Area, encompassing Los Angeles, Long Beach, and Anaheim, extends across Southern California. It’s the second most populous metro area on our list, with more than 12.8 million residents (trailing only the greater New York City area). It's known for its diverse cultural landscape, world-renowned entertainment industry, and stunning Pacific coastline. The region is a major global economic center, with industries spanning entertainment, technology, and international trade. Residents have access to an array of cultural attractions, beautiful beaches, and a dynamic urban lifestyle.
The Washington, D.C. Metropolitan Area has approved 6,806 permits for new construction of single-family homes in 2023 so far — more than 2,000 more permits than the Philadelphia metro area, which mirrors Washington in size.
The Washington, D.C. Metro-Area includes the nation's capital, Washington, D.C., as well as surrounding areas in Virginia, Maryland, and West Virginia. It serves as the political and administrative center of the United States and is home to numerous government agencies, think tanks, and international organizations. Beyond politics, the region boasts a rich history, cultural institutions, and a highly educated population. It offers a mix of urban living, historic neighborhoods, and a vibrant cultural scene, and is home to more than 6.3 million people.
In the decade leading up to the 2007 to 2008 financial crisis (between 1997 and 2006), the United States averaged 1.3 million new build permits for single-family homes per year. In the decade following (2007 to 2016), the United States averaged just 609,000 per year.
You can see the impact on the chart below:
With such diminished demand, the skilled tradespeople who make scaled and sustainable construction possible found other lines of work — many left the industry entirely. So when mortgage rates dropped to historic lows and housing demand picked back up again in 2021, there weren’t enough skilled workers to staff job sites.
For builders who were able to find workers, supply chain issues spurred by the pandemic created an additional obstacle, slowing production down and further contributing to the housing shortage.
To make matters worse, the number of households steadily grew during this time period. As you can see in the chart below:
The dual pressures of the shrinking output of new homes and an increase in the total number of households have compounded a significant deficit in the share of homes available for motivated buyers.
Data was collected from the U.S. Census Bureau’s Building Permits Survey (BPS) from July 2023, Historical BPS (1995 - 2019), and the Annual Resident Population Estimates for Metropolitan and Micropolitan Statistical Areas and Their Geographic Components for the United States (CBSA-EST2022) from April 1, 2020 to July 1, 2022.
Orchard analyzed state, regional, and MSA-level data for the creation of this report.
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