Construction Hammers Down Housing Costs Ahead of Spring Home-Buying Season
Increased residential construction activity is improving affordability in certain markets, which has especially been seen in the South. This surge in the southern United States housing supply has resulted with over half of the 1.5 million building permits issued in 2024 located in the region. First American did an analysis showing strong correlation between new home construction and home prices, noting that elevated construction activity is leading to slower price appreciation or price declines.
According to First American, In the housing market, you can’t buy what’s not for sale – and with existing-home sales hovering near their lowest level since the late 1990s(opens in a new tab/window), home buyers nationwide will likely continue to face limited availability this spring and summer. This lack of supply makes it harder for first-time homebuyers to jump into the market and also hurts existing homeowners looking to buy their next home. Additionally, with elevated mortgage rates and affordability challenges, many potential buyers won’t be able to afford a home even if they find one, keeping a lid on market normalization.
Homebuilders have kept their hammers busy to help narrow the inventory gap, especially in certain markets. Buyers in these markets will have more opportunities to find affordable options during the 2025 spring home-buying season. According to the U.S. Census Bureau, nearly 1.5 million building permits(opens in a new tab/window) were issued for privately-owned housing units in 2024, including single-family homes and multi-unit properties like duplexes and triplexes. However, this building surge has not been evenly distributed across the country. Over half of the permits, 53 percent or 803,000 units, issued in 2024 were in the South, more than double the number issued in any other Census region.
