Despite National Housing Shortage, Number of Housing Units Authorized to Start Construction Has Stagnated

The U.S. is a land of plenty, but there are many areas in which the nation is lacking — including housing. While estimates on housing unit shortages vary, persistently steep home prices and rent costs make it clear that the U.S. doesn’t have enough homes to satisfy consumer demand.

Despite this, the number of housing units authorized to begin construction has stalled over the past year. Specifically, LendingTree’s analysis of the latest U.S. Census Bureau Building Permits Survey finds that the number authorized to begin construction from January through July 2024 grew by only 1.78% compared to the same period in 2023.

This modest increase doesn’t necessarily mean every part of the U.S. lacks housing, but it highlights how little progress is being made toward addressing broader supply issues.

Key findings

• Nationwide, 878,199 housing units were authorized to begin construction from January through July 2024 — a 1.78% increase from the same period in 2023. Of the units authorized to begin construction, 599,197 were single-family homes, 31,289 were in midsize multifamily buildings and 247,713 were in large multifamily buildings. Compared to the first seven months of 2023, the number of single-family homes authorized to begin construction jumped by 13.69%, while the number of midsize and large multifamily homes increased by 1.38% and decreased by 18.76%, respectively.
• The estimated value of all housing units authorized to begin construction from January through July 2024 was $227.65 billion. Though the number of authorized units hasn’t changed much year over year, the value of the units authorized in the first seven months of 2024 was up 11.33% from the same period in 2023. This increase can be attributed to persistent inflation driving up housing prices, as well as a greater emphasis on the construction of single-family homes.
• Three large and highly populated states — Texas, Florida and California — saw the most new unit authorizations in the first seven months of 2024. In these states, 133,549, 111,024 and 59,263 units were authorized, respectively. But while they saw the most new authorizations in 2024, they’re down from 2023 in all three states — 1.89% in Texas, 3.43% in Florida and 8.91% in California.
• Alaska, Rhode Island and Wyoming saw the fewest authorizations from January through July 2024. 504, 860 and 1,204 housing units were allowed to begin construction in these states, respectively. Of these three, only Alaska saw a year-over-year decrease, at 8.20%. Authorizations were up 16.69% in Rhode Island and 36.20% in Wyoming.
• Authorizations saw the largest year-over-year increases in New York, Wyoming and Nebraska. Total authorizations rose by 80.47% in New York, 36.20% in Wyoming and 34.95% in Nebraska. Even if authorizations rose in some states, that doesn’t mean they’ve addressed housing supply issues. For example, even if all 28,070 homes authorized in New York in the first seven months of 2024 were built, the state would still not have enough housing to satisfy demand.
• Oregon, South Dakota and Colorado saw the largest year-over-year decreases in the number of homes authorized to begin construction. Authorizations fell by 22.56% in Oregon, 22.30% in South Dakota and 21.40% in Colorado.

Where the largest number of new housing units have been authorized to begin construction

No. 1: Texas

• Number of housing units authorized to begin construction, January through July 2024: 133,549
• Year-over-year percentage change in number of authorized housing units: -1.89%
• Number of single-family housing units authorized to begin construction, January through July 2024: 97,551
• Year-over-year percentage change in number of authorized single-family units: 15.58%
• Number of housing units in midsize multifamily buildings authorized to begin construction, January through July 2024: 4,913
• Year-over-year percentage change in number of housing units authorized in midsize multifamily buildings: -14.68%
• Number of housing units in large multifamily buildings authorized to begin construction, January through July 2024: 31,085
• Year-over-year percentage change in number of housing units authorized in large multifamily buildings: -32.36%

No. 2: Florida

• Number of housing units authorized to begin construction, January through July 2024: 111,024
• Year-over-year percentage change in number of authorized housing units: -3.43%
• Number of single-family housing units authorized to begin construction, January through July 2024: 77,833
• Year-over-year percentage change in number of authorized single-family units: 9.49%
• Number of housing units in midsize multifamily buildings authorized to begin construction, January through July 2024: 1,889
• Year-over-year percentage change in number of housing units authorized in midsize multifamily buildings: -23.09%
• Number of housing units in large multifamily buildings authorized to begin construction, January through July 2024: 31,302
• Year-over-year percentage change in number of housing units authorized in large multifamily buildings: -24.44%

No. 3: California

• Number of housing units authorized to begin construction, January through July 2024: 59,263
• Year-over-year percentage change in number of authorized housing units: -8.91%
• Number of single-family housing units authorized to begin construction, January through July 2024: 36,712
• Year-over-year percentage change in number of authorized single-family units: 8.18%
• Number of housing units in midsize multifamily buildings authorized to begin construction, January through July 2024: 2,487
• Year-over-year percentage change in number of housing units authorized in midsize multifamily buildings: 19.34%
• Number of housing units in large multifamily buildings authorized to begin construction, January through July 2024: 20,064
• Year-over-year percentage change in number of housing units authorized in large multifamily buildings: -30.90%

States where the smallest number of new housing units have been authorized

No. 1: Alaska

• Number of housing units authorized to begin construction, January through July 2024: 504
• Year-over-year percentage change in number of authorized housing units: -8.20%
• Number of single-family housing units authorized to begin construction, January through July 2024: 301
• Year-over-year percentage change in number of authorized single-family units: -10.42%
• Number of housing units in midsize multifamily buildings authorized to begin construction, January through July 2024: 50
• Year-over-year percentage change in number of housing units authorized in midsize multifamily buildings: 19.05%
• Number of housing units in large multifamily buildings authorized to begin construction, January through July 2024: 153
• Year-over-year percentage change in number of housing units authorized in large multifamily buildings: -10.53%

No. 2: Rhode Island

• Total number of housing units authorized to begin construction, January through July 2024: 860
• Year-over-year percentage change in number of authorized housing units: 16.69%
• Number of single-family housing units authorized to begin construction, January through July 2024: 431
• Year-over-year percentage change in number of authorized single-family units: 2.13%
• Number of housing units in midsize multifamily buildings authorized to begin construction, January through July 2024: 195
• Year-over-year percentage change in number of housing units authorized in midsize multifamily buildings: 71.05%
• Number of housing units in large multifamily buildings authorized to begin construction, January through July 2024: 234
• Year-over-year percentage change in number of housing units authorized in large multifamily buildings: 16.42%

No. 3: Wyoming

• Total number of housing units authorized to begin construction, January through July 2024: 1,204
• Year-over-year percentage change in number of authorized housing units: 36.20%
• Number of single-family housing units authorized to begin construction, January through July 2024: 1,008
• Year-over-year percentage change in number of authorized single-family units: 30.23%
• Number of housing units in midsize multifamily buildings authorized to begin construction, January through July 2024: 93
• Year-over-year percentage change in number of housing units authorized in midsize multifamily buildings: -1.06%
• Number of housing units in large multifamily buildings authorized to begin construction, January through July 2024: 103
• Year-over-year percentage change in number of housing units authorized in large multifamily buildings: 543.75%

Why aren’t more homes being built?

As our study shows, the number of new homes authorized to begin construction has largely stagnated over the past year. This is despite the nation experiencing a well-documented housing shortage. One of the main drivers is related to construction costs.

This doesn’t mean supply shortages are unavoidable, and some problems will likely be easier to solve. For example, the Federal Reserve is poised to lower interest rates through the remainder of 2024, which should help ease some of the costs associated with borrowing for both builders and homebuyers. In that same vein, as inflation continues to cool, raw material costs should become more manageable.

That said, other problems aren’t going to be so easy to deal with. Overly restrictive zoning laws or costly and time-consuming permitting requirements are nothing new in the U.S., and it can be especially difficult to change regulations to make construction more affordable while also ensuring that laws designed to help keep areas safe and habitable remain on the books.

While reforming outdated regulations and otherwise working to ensure that enough homes are being built is certainly easier said than done, it’s a necessity. Until housing supply in the U.S. increases, affordability issues are likely to persist.

3 tips for homebuilders

If you’re looking to build a new house, here are three tips that can help you make the process a bit easier to navigate.

• Start early. Building a house is time-consuming and can require a lot of legwork before you break ground. The sooner you seek approval for necessary permits and begin preparing other important documentation (like architectural plans), the smoother the building process is likely to be.
• Shop around for everything from materials to loans. Comparing prices on raw materials from different suppliers can help you ensure you get a good deal on what you’re buying. In that same vein, shopping around and comparing offers from different lenders can help you snag a lower rate on a home construction loan, which can reduce your payments and make building more affordable.
• Be thorough. While saving time and energy by cutting corners might seem like a good idea at some stages of the often stressful building process, doing so isn’t a good idea. Not only can shoddy construction render your home unlivable once it’s built, but failure to secure proper permitting before you break ground can result in costly legal bills and result in your home never being finished.

Methodology

Data in our study comes from the U.S. Census Bureau Building Permits Survey. Our study looks at the number of housing units authorized to be built by a building or zoning permit in each of the nation’s 50 states, excluding the District of Columbia and U.S. territories and protectorates.

We break down the number of authorized individual units by the following structure types: single-family, midsize multifamily and large multifamily. These structures are defined as follows:

• Single-family: One-unit structures. This includes fully detached or semidetached homes, as well as row houses and town houses.
• Midsize multifamily: Buildings that contain two to four individual housing units within them.
• Large multifamily: Buildings that contain five or more individual housing units within them.