As spring homebuying season revs up, a new analysis by Realtor.com highlights the 10 U.S. cities poised to see the most residential construction activity this year.
The number of listings for available homes is about half of what it was a year ago, the report said, and buyers are seeking single-family homes in less densely populated areas away from urban centers due to the COVID-19 pandemic. This has created a severe shortage of inventory in many parts of the country.
"Suburbs and more rural areas, where there's room to put up larger homes, have become more popular than condos in big, expensive cities," the report says. "And as white-collar workers from more expensive parts of the country are able to work remotely, they're seeking larger homes farther out."
The group analyzed building permit data to determine where builders will be constructing the most single-family homes, condos and co-ops, apartments, townhouses, and duplexes. They are:
|Rank||City||Median list price||Number of permits||One-year change in permits|
|9||Charlotte, North Carolina||$386,450||4,359||11%|
In some parts of the country, the boom in residential construction has seen commercial contractors pivoting to work on housing jobs. Nevertheless, despite the surging demand for new homes, residential builders have been as impacted by pandemic-related challenges as their commercial counterparts.
In fact, housing production weakened in February as higher material costs and interest rates continued to affect the housing industry, according to the National Association of Home Builders. Overall housing starts decreased 10.3% to a seasonally adjusted annual rate of 1.42 million units, the NAHB said.
In particular, soaring lumber prices — up 170% over the past 10 months — are adding thousands of dollars to the cost of a new home and causing delays and cancellations of contracts.
"The increase in lumber prices is forcing our company to delay construction starts, which will only exacerbate the lack of supply in our market," said NAHB first vice chairman Jerry Konter, a home builder and developer from Savannah, Georgia, in a release.
Alicia Huey, a custom home builder from Birmingham, Alabama, and second vice chairman of NAHB, said that the price of her lumber framing package on an identically sized home has more than doubled over the past year from $35,000 to $71,000.
"This increase has definitely hurt my business," she said. "I've had to absorb much of this added cost and even put some construction on hold because I would be losing money by moving forward."