May 2, 2024 - Real Estate

Single-family home construction slumps in Raleigh

Data: Census Bureau via FRED, Federal Reserve Bank of St. Louis; Chart: Axios Visuals

Raleigh single-family home construction is down nearly 10% compared to last year, per the latest numbers from Federal Reserve Economic Data.

Why it matters: Our inventory problem isn't going away.

  • Tight inventory compounds the area's existing affordability challenges. This is the least affordable housing market for first-time buyers in more than four decades.

Zoom in: Building new homes in Raleigh and Cary takes time. The process of filing subdivision plans and housing permits can take anywhere from one to two years, the Triangle Business Journal reported.

New home construction lags elsewhere in the Triangle. In the Durham-Chapel Hill area, building permits declined 37% year over year, FRED data show.

State of play: Single-family home construction has slowed nationally as many prospective homebuyers are staying on the sidelines given the current cost of financing, according to the National Association of Realtors. Builders instead are focusing on multi-family construction.

The big picture: Single-family home construction is down year over year across the U.S., but it's grown 30% from March 2020 to March 2024, per FRED data.

The intrigue: Some new-build communities are offering lower mortgage rates, an enticing deal as rates touched 7.5% in April.

What we're watching: Built-to-rent housing, a growing alternative to buying a house, especially among cash-strapped North Carolinians.

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