Sun Belt metros are leading a resurgence in home building as prices soar and inventory declines amid elevated demand from migrating buyers. Austin, TX led the way during the first quarter of 2022 with 31.1 single-family building permits per 10,000 people, the most per capita of any major U.S. metro, Redfin reports. Other sunny metros like Raleigh, Jacksonville, Nashville, and Charlotte followed closely behind, and other Texas hotspots like Houston and Dallas are also included in the top ten.
Of 53 metros with populations of 1 million residents or more, 49 issued more single-family permits per capita during the first quarter than they did throughout the ten years leading up to the pandemic from 2010 to 2019. Homebuyer demand is receding in the wake of fast-rising mortgage rates, but a boost in housing supply could create a window of opportunity for buyers delayed by a lack of affordability.
Homebuyer demand has started cooling, housing supply is declining at a slower pace than it was at the peak of the pandemic and sales of new homes are down. But the number of homes for sale remains near all-time lows and monthly mortgage payments are near their record high, partly due to mortgage rates that have risen from roughly 3% to over 5% in recent months. Building more homes is one of the best ways to ease the affordability crisis.
“If there had been enough homes at the start of the pandemic, housing costs might not have skyrocketed the way they did over the past two years,” said Redfin Chief Economist Daryl Fairweather. “The government should support homebuilding with things like subsidies and upzoning even as demand pulls back so the housing-supply hole starts to fill in. There still aren’t enough homes to meet the pace of household creation, and we need to be more prepared when demand inevitably picks back up.”