Photo: Trish Hartmann/Flickr
While single-family home construction is currently increasing nationally at a slower pace than in previous economic recoveries, new data has been released that shows some US metro areas are recording much stronger single-family construction momentum than others.
RCLCO, a real estate consulting firm, has released its findings after examining the momentum in single-family home construction activity in the 25 most active US metros. The study determined that metros with strong domestic net in-migration record the highest momentum in single-family construction.
In order to rate the metros, RCLCO looked at the number of single-family permits approved from 2011 to 2015 in each of the 25 most active metros. In addition, it compared population growth, employment growth and unemployment levels, all of which RCLCO says are factors that drive demand for housing.
The top-ranking metros are those with the “strongest demand drivers and thus the best potential for further for-sale single-family homebuilding.”
Orlando ranked as the metro with the most momentum. It topped the list in projected population growth through the second quarter of 2017, and has shown strong employment over the last year in relation to Orlando’s share of US jobs.
Austin and Dallas-Fort Worth fell into second and third place. RCLCO cited similarly strong employment growth that benefitted from “diversified economies and significant business relocations from other states.”
Phoenix and Jacksonville rounded out the top five. Phoenix ranked first in projected employment growth through the second quarter of 2017 while Jacksonville ranked second in projected employment growth.
Four of the five metros that ranked at the bottom of the 25 most active metros list — Washington, DC, Chicago, Philadelphia and New York (which had the least momentum of the 25 metros) — were on the east coast. Los Angeles, which ranked 22nd on the list, was one of only two west coast metros on the list — Riverside, CA was the other (number 18 on the list).
Strong domestic net in-migration helped to “drive supplemental demand in addition to natural population increase” in the top ranking metros.
Conversely, metros ranking lower on the list were generally located in states that have large domestic out-migration — often to one of the metros at the top of the list. These metros are “more dependent on foreign migration.”
View all of RCLCO’s findings here.