Jul 25, 2023 - Real Estate

Indianapolis home construction on the rise

Data: U.S. Census; Note: Unadjusted estimate of privately owned units of any size; Chart: Axios Visuals

Central Indiana is experiencing a homebuilding boom, especially for apartments.

Driving the news: 68.8 new homebuilding permits per 100,000 residents were issued across the 11-county Indianapolis metropolitan area in May 2023, up from 58.8 in May 2020.

  • Of the 1,437 total permits, 720 were issued for single-family homes, 24 for buildings with 2-4 units, and 693 for those with five or more units.
  • That's per 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. But a bump in new home construction could bring them down.

The big picture: Recent estimates from Freddie Mac indicate the U.S. is short about 3.8 million units of housing, either for rent or purchase, Axios' Emily Peck reports.

Zoom in: Indianapolis has gone from one of the slowest homebuilding markets in the nation before the pandemic — 23.3 permits per 100,000 residents in November 2019, well below the national average — to one of the hottest.

  • Indianapolis-area homebuilding activity in May approached levels seen in fast-growing markets including Phoenix (71.1 permits per 100,000 residents), Atlanta (74) and Denver (77).

What they're saying: Apartment construction in the area is near record highs, Alex Thomas, a senior research analyst for John Burns Research and Consulting, tells Axios based on his firm's data.

  • The market's "relatively low development costs, deregulation, and easier land acquisition all attract investment," he says.

Meanwhile, single-family home construction also has picked up, thanks in part to low unemployment and job growth across almost every sector.

  • "Indianapolis is one of the brighter spots for homebuilding in the Midwest," Thomas says, adding that the area is getting "a good chunk of outmigrants from Chicago in particular."

Zoom out: Nationwide, 42.3 new homebuilding permits per 100,000 residents were issued in May 2023, up from 32.9 in May 2020.

State of play: While many newly built homes have been targeted at (and priced for) relatively wealthier buyers, homebuilders are starting to focus on more affordable projects for first-time homebuyers, per Axios' Matt Phillips.

Editor's note: This story has been corrected to note that the senior research analyst is Alex Thomas (not Thompson).

avatar

Get more local stories in your inbox with Axios Indianapolis.

More Indianapolis stories