These 10 Cities Will Dominate Home Construction in 2019


These 10 Cities Will Dominate Home Construction in 2019

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Home construction across the United States is slowing down—and the timing couldn’t be worse.

The country is already at its lowest point in a decade for housing affordability, due largely to the shortage of homes on the market. In February this year, according to U.S. Census Bureau data, 9.9% fewer homes than a year ago had been started but not yet completed. The lack of newly constructed homes is only exacerbating the crisis.

But hold on! There are still a number of markets in the country where foundations are being poured, frames are being erected, and contractors are contracting, everywhere you look. The realtor.com® data team went out and identified these boom towns for new construction. These tend to be high-demand metropolitan areas* with plentiful gigs, lots of amenities, and ample room to grow.

They’re also wise investments for home buyers.

“Adding new homes is key to a city’s economic health,” says Robert Dietz, chief economist of the National Association of Home Builders. Much of the new construction he’s seeing is in the South and Southwest, where land and construction labor is cheaper and there are fewer costly and time-consuming building regulations. (New York City and Los Angeles, our outliers, made the list simply because they’re so darn big.)

Despite the fact that new homes tend to be more expensive than existing ones—about 26% pricier, thanks to high labor, materials and land costs—they help to keep runaway home prices at least somewhat in check by providing buyers with more options. It’s the housing circle of life: “Markets that add inventory keep housing affordable and in turn attract more businesses and startups in those areas,” says Dietz.

To come up with our findings, we analyzed census data to figure out where builders scored the most residential construction permits. The permits are for single-family homes, condos and co-ops, apartments, townhouses, and duplexes. They’re not an iron-clad guarantee that new housing will be completed an average of seven months later. But they’re the best indication that it will.

So where is building booming?

Cities building the most new homes

Tony Frenzel


1. Dallas, TX

Median list price: $335,700 Number of permits: 63,421 One-year change in permits: 2.8%

Dallas, TX, construction

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Big companies, like Toyota, are relocating or expanding into the Big D at a breakneck pace, ushering in a torrent of new residents. That’s kept builders busy.

Unlike the coasts, this large metro area has lots of relatively inexpensive land available for development.  Plus, Texas is known for its builder-friendly laws and regulations, and some of the area’s northern suburbs and smaller cities are big-time beneficiaries. Frisco, 40 minutes from downtown Dallas, has tons of new 4,000-square-foot two-story houses with big yards. It was named the third fastest-growing suburb by realtor.com last year.

And buyers here don’t have to be millionaires to own new homes.

“We’ve hit a ceiling with how high price appreciation can go up,” says Ted Wilson, principal at Residential Strategies, a real estate market research firm in Dallas. “So builders over the past two years are trying to get more in the affordable price points: $250,000 to $350,000. That range is the name of the game right now.”

2. Houston, TX

Median list price: $310,100 Number of permits: 57,021 One-year change in permits: 33.6%

Home construction in Houston, TX

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The devastation of Hurricane Harvey, which barreled into the city in August 2017, is one reason permits are up. Many residences had to be razed and rebuilt, while some folks opted to build new homes in less flood-prone areas.

And new homes these days are smaller and at a lower price point. Why? Because of lots of first-time buyers and folks downsizing.

“Millennials are getting to the stage in life where they are buying homes,” says Lawrence Dean, a Houston regional director at Metrostudy, a property research firm. “And there are more empty nesters who are downsizing because they need less space.”

One of the hottest spots to snag a new home is in Sienna Plantation, TX, a master-planned suburban community 40 minutes south of downtown Houston. Homes here range from entry-level, three-bed, two-baths priced around $300,000 to luxury abodes starting at over $600,000.

3. New York, NY

Median list price: $525,100 Number of permits: 48,384 One-year change in permits: -3%

Hudson Yards construction in New York, NY

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The first phase of Hudson Yards, the long-awaited megadevelopment, opened to much fanfare last month. The nation’s most expensive building complex ever, it created a brand-new Manhattan neighborhood of luxe residential towers, shopping, office space, and a stairway sculpture like a massive honeycomb. When it is fully completed, it will provide 20,000 new housing units near the Hudson River.

Nonetheless, construction is slumping in most parts of the metro.

Building permits dipped 3% in the region, which includes not just the five boroughs of the city, but also the surrounding New York state, New Jersey, Connecticut, and Pennsylvania suburbs. That’s because land and skilled labor aren’t easy to come by—and aren’t cheap.

“Building of high-end condominiums, the bulk of the new developments in the city, has cooled,” says Jonathan Miller, a New York City-based real estate appraiser.

The slowdown has actually been playing out for years. In 2014, the luxury condo market peaked. Two years later, it had become harder for developers to obtain financing, so they put up fewer projects.

The New York metro still made this ranking because of its sheer size and because there are still certain pockets of continued development. Long Island City, Queens, which recently won—and then lost—its bid to house Amazon’s HQ2, has lots of high-rise condos and apartment buildings going up. Still.

4. Atlanta, GA

Median list price: $313,300 Number of permits: 39,132 One-year change in permits: 19%

Atlanta, GA

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Atlanta is known for its sprawl—which keeps moving farther and farther out from the city’s center.

One of the fastest-growing communities in the area, and the nation, is the suburb of Scottdale. The bedroom community is just 25 minutes northeast of Atlanta, and buyers can scoop up homes there at around $250,000, significantly less than the median in the city. But that growth has come at a cost: Home prices rose 178% in the last five years.

Despite a surge in permits, there still aren’t enough new homes for sale here. That’s why many would-be new home buyers are turning instead to places renovated by flippers—and why Atlanta was among the Top 10 cities for home flips last year.

5. Phoenix, AZ

Median