New-home construction in the U.S. reached an important benchmark back in February of this year when more than 1.5 million residential building permits were issued over the prior 12 months. Still, in part due to continued supply chain challenges and the ongoing impact of the COVID pandemic, many projects remain behind schedule.
According to Zillow analysts, when factoring in population growth, since 2008, there has been a shortfall of 1.35 million homes in just the 35 largest U.S. metros. That is, there would have been 1.35 million more new single-family construction permits handed out if they had kept up with population growth at the same rate as they did between 1985-2000.
At the current pace of permitting, that shortfall is as if no homes at all were built for 2.7 years.
The aforementioned supply struggles mean that new home construction completion has dipped 8.4 percent since last year. According to Zillow, the number of homes permitted, but not started, is up 44.8 percent from a year ago.
“Builders in recent months have put the pedal to the metal to get new homes up and meet a rush of demand, and we just saw the first full year of above-average construction since the mid-2000s housing crash,” says Zillow senior economist Jeff Tucker. “This isn’t a new boom cycle of new construction so much as it’s an attempt to get even from the last bust. There is still a long way to go to catch up from more than a decade of slow construction, and some markets have longer to go than others.”
Dallas has had the biggest post-recession shortfall of single-family building permits, falling 167,093 homes behind the pre-2000 average. Miami (142,650), Phoenix (122,288) and Seattle (113,292) have also fallen behind by more than 100,000 homes.
In SoCal, Riverside is also facing a sizable shortage of approximately 73,265, followed up San Diego (64,625) and L.A. (13,008).
Norcal markets including San Francisco, San Jose and Sacramento are also all behind between 25,000-85,000 homes.
Chicago has the largest surplus of new homes at 73,467, with Pittsburgh and Detroit close behind. In all, nine metros now have a surplus of new single-family construction, per the report.