This map shows which housing markets have a growing supply of homes

Whereas permit activity for brand new dwelling building has dipped from the peak of the pandemic housing growth, with permits in October 2023 dropping 13% beneath October 2021 ranges, the homebuilding sector stays regular. Regardless of deteriorated housing affordability, and mortgage charges hitting the 8% mark this fall (earlier than falling this month), October 2023 witnessed a stage of allow issuance similar to that of pre-pandemic October 2019, in keeping with the newest information.

Development of multi-family properties confirmed indicators of weakening, with permits for buildings with at least 5 units falling 26% 12 months over 12 months. In distinction, single-family home permits have skilled a resurgence from final fall’s hunch, leaping 14% between October 2022 and October 2023.

What’s driving this single-family resilience?

To take care of single-family dwelling gross sales, builders like Lennar and KB Home have chosen to trim their frothy pandemic-era margins a bit. As an alternative of outright worth reductions, the prevailing method has been to offer mortgage rate buydowns. These 4% and 5% mortgage charges are attracting patrons who in any other case would have turned to the prevailing dwelling market.

Even in housing markets experiencing a hunch, such as Austin, the place dwelling costs in keeping with the Zillow Residence Worth Index have dropped by 18% from their peak, single-family builders stay energetic. Surprisingly, Austin secured the third-highest variety of permits issued nationwide in October—and essentially the most permits per capita—underscoring that builders aren’t turning away from Texas.

The Solar Belt continues to dominate the nation’s homebuilding panorama, a development predating the pandemic frenzy. The U.S. Census Bureau’s information for October reveals the next high 10 markets by way of permits issued:

1. Dallas, TX (6,137)
2. Houston, TX (5,453)
3. Austin, TX (4,261)
4. Phoenix, AZ (3,955)
5. Atlanta, GA (3,177)
6. New York, NY (3,105)
7. Charlotte, NC (2,695)
8. Tampa, FL (2,213)
9. Raleigh, NC (2,149)
10. Indianapolis, IN (1,870)

Within the wake of hovering mortgage charges, single-family homebuilding has displayed resilience, defying fears of an outright homebuilding bust in 2023. This 12 months, at the very least, mortgage fee buydowns did the trick.