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

Core Insights - Realtor.com®'s report identifies South Carolina, North Carolina, and Idaho as the leading states in new home construction and affordability rankings [1][2] - The report highlights that new construction is essential for adding inventory and affordable housing options across the United States [1][4] New Construction Rankings - The top ten states for new construction activity are primarily located in the South and West regions, with South Carolina and North Carolina at the forefront [1][2] - The rankings are based on three criteria: the share of new builds in total listings, the price per square foot premium of new builds compared to existing homes, and the number of permits for new single-family homes per capita [3] Top Ten States Overview - South Carolina ranks 4th in new construction share, 2nd in price premium, and 2nd in permits per capita, averaging a rank of 2.67 [2] - North Carolina ranks 1st in new construction share, 6th in price premium, and 3rd in permits per capita, averaging a rank of 3.33 [2] - Idaho ranks 3rd in new construction share, 9th in price premium, and 1st in permits per capita, averaging a rank of 4.33 [2] - Other notable states include Arizona (10th), Utah (5th), Florida (20th), Delaware (2nd), Texas (6th), Tennessee (8th), and Georgia (9th) [2] Affordability Trends - New home prices are currently lower than existing homes and have decreased significantly since the peak in July 2022 [4] - Builders are responding to affordability challenges by constructing smaller homes, with homes built in 2024 being 8% smaller than those built in 2022 [4] - The construction of smaller, lower-priced homes is contributing to the stabilization of listing prices in the market [4] Market Demand and Supply - There is a significant supply shortage of over 7 million single-family homes in the U.S. as of the end of 2023, driven by a pace of household formation that exceeds homebuilding rates [4] - The need for newly built homes is critical to meet housing demand and is a vital component of overall economic activity [4]