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NAR observed there is a too-low level of single-family home construction in 80 percent of measured metro areas, which is creating a shortage in affordable homeownership opportunities. In preparing its new list, NAR’s reviewed new home construction relative to job creation in 171 markets between 2013 and 2015.
“Inadequate single-family home construction since the Great Recession has had a detrimental impact on the housing market by accelerating price growth and making it very difficult for prospective buyers to find an affordable home–especially young adults,” NAR Chief Economist Lawrence Yun. “Without the expected pick-up in building as job gains rose in recent years, new and existing inventory has shrunk, prices have shot up and affordability has eroded despite mortgage rates at or near historic lows.”
According to NAR, the top 10 metro areas with the biggest need for more single-family housing starts to get back to the historical average ratio are New York (218,541 permits required), Dallas (132,482 permits required), San Francisco (127,412 permits required), Miami (118,937 permits required), Chicago (94,457 permits required), Atlanta (93,627 permits required), Seattle (73,135 permits required), San Jose (69,042 permits required), Denver (67,403 permits required) and San Diego (55,825 permits required).
On the flip side, NAR determined that the best markets where single-family housing starts are seen as adequate to local job growth (at a ratio of 1.6) are Pensacola, Fla., Huntsville, Ala., Columbia, S.C., and Virginia Beach, Va.