New housing supply can drastically improve the affordability in a given area, but some regions of the U.S. are doing a better job at adding more housing. A recently released national housing report card from real estate marketing platform Realtor.com ranked states across the U.S. based on their affordability and how quickly builders are adding more housing. Of the 13 "A" and "B" grades handed out, all went to states in the South or Midwest. On the other hand, the West and Northeast received the most "F" grades due to their relatively strict regulations and high prices that limit new construction.
South Carolina received the highest grade. There, new homes are priced 8.2% lower than the typical existing home. By comparison, the median sales price for new homes nationwide was 3.4% higher than for existing homes last year. Texas also scored high. This is becasue approximately 15.3% of the national residential construction permits last year were in Texas, even though just over 9% of the nationwide population is located there.
A total of seven states received the lowest grade of F on the new report card: Oregon, Connecticut, California, Hawaii, New York, Massachusetts, and Rhode Island.
Generally speaking, these are states that combine poor home affordability with inadequate residential construction activity to keep up with demand. Based on numerical score, Rhode Island ranks lowest on the report card. As the smallest state, Rhode Island might suffer from a lack of available land to build on—although the second-smallest state, Delaware, ranked above average with a C+.
California, a state notorious for its unaffordable housing, is the worst in the nation for its permits-to-population ratio. Last year, California accounted for 6.8% of all residential permits, despite having 11.7% of the total population. Read more
