In the market for a new home? You’ll fare better if you’re house-hunting in Texas.
Dallas, Houston and Austin are on pace to build a total of nearly 130,000 new homes in 2017, based on a Trulia analysis of building permits. That’s more than 10 percent of all new construction expected in the U.S. this year, and enough to put all three metropolitan areas in the top five for permitting activity. New York and Phoenix round out the group.
Austin is growing especially fast. The metro area is poised to add 30,000 new homes this year, more than double its yearly average from 1980 to 2016.
The pace of new construction doesn’t tell the whole story. It’s also important to look at whether new inventory is keeping up with the local market, together with the historic pace of construction.
San Francisco and San Jose, for example, are both adding new housing well above their historic rates, the Trulia report shows, but are on pace to add fewer homes than Raleigh, N.C. San Francisco has issued only one permit for new housing for ever six new jobs. Sacramento, San Diego, San Jose and Los Angeles also rate poorly for building new homes to support new jobs-unsurprising given California’s reputation for restrictive zoning regulations. In general, strong job growth and a low baseline for new construction have left these cities starved for inventory.
That’s unfortunate for Californians, because new construction can have a ripple effect. As buyers move into new homes, they put their existing homes on the market, increasing inventory over the long term.
Nationwide, the number of homes listed for sale in a given month has been shrinking since the middle of 2015, recent research from Redfin shows. In San Jose, inventory decreased by 42 percent from June 2016 to June 2017, according to the Redfin report, forcing buyers to compete for a shrinking pool of listings and driving up prices. Adding new homes will help, but builders will have to catch up with job growth to make a real dent in the housing shortage.
In the meantime, there’s no shortage of new home construction getting under way in Texas.