Boston trails the nation in home construction
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Boston significantly trails the national average for building new homes, showing that Massachusetts has a long way to go to increase stock and confront its housing crisis.
Driving the news: 26.5 new homebuilding permits per 100,000 residents were issued in Boston in May 2023 — roughly half the nationwide rate of 42.3 permits per 100,000 residents.
- That's according to a new analysis of Census Bureau data from Axios' Kavya Beheraj and Alex Fitzpatrick.
Why it matters: A post-pandemic nationwide housing shortage is keeping prices high and few places are more expensive than Boston. Massachusetts needs to ramp up construction if the state is ever going to have enough stock for the population.
Recent estimates from Freddie Mac indicate the U.S. is short about 3.8 million housing units for rent or purchase, Axios' Emily Peck reports.
- A bump in new home construction could bring prices down.
Zoom in: Boston's 2023 rate is up slightly from 24 permits per 100,000 people in May 2020, but the national rate has increased far more over the same time.
- Of Boston's 1,303 total permits in May 2023, 916 were issued for buildings with five or more units, 303 for single-family homes and 54 for buildings with 2-4 units.
By the numbers: In May 2023 139,600 total permits were issued across the U.S. — the majority of which were for single-family homes.
Meanwhile: Other cities are seeing a significant explosion in new home construction as a post-pandemic reality takes hold.
- In Raleigh, for example, 138 new permits per 100,000 residents were issued in May 2023, up from 71.7 in May 2020.
- Ample housing opportunities is one reason why southern and western states have an economic advantage over us.
State of play: While many newly built homes have been targeting (and thus priced for) relatively wealthier buyers, homebuilders are starting to focus on more affordable projects for first-time buyers, per Axios' Matt Phillips.
What they're saying: "It's a renewed focus, given the lack of inventory," Robert Dietz, chief economist at the National Association of Home Builders, told Matt.
- "First-time buyers are going to play a key role in the order expansion for homebuilders going forward."
Yes, but: "There's little sign of a Levittown-style surge of modest-home construction to magically solve the inventory problem any time soon," Matt writes.
- Plus, even if costs come down, mortgage rates remain relatively high.