By Manuel Gutierrez, Consulting Economist to NKBA

Key Takeaways:

• Half the permits issued in the 369 U.S. metros are concentrated among the top 25.
• Three of the top five metro issuers are in Texas.
• Number of permits issued has increased an average of 48% so far this year.

The 369 metropolitan areas in the U.S. have issued 406,000 permits to build single-family houses so far this year. Activity in metro areas accounts for 83.9% of all U.S. housing, which is to be expected, since slightly over 83% of the American population resides within a metropolitan area.

Much of the construction, however, is concentrated in a small number of metropolitan areas. Through May, the top 15 metro areas have generated a total of 156,000 single-family permits, which means that nearly 40% of all single-family permits originate in just 4% of all metro areas.

Half of the housing permits originate among 25 metropolitan areas, which includes prominent areas like Las Vegas at #18, with 4,985 single-family permits issued so far this year, and Los Angeles at #20, with 4,607.

Figure 1 shows the number of single-family permits issued through May in the top 15 metro areas. The Houston metro leads with slightly more than 23,000 new single-family housing permits, followed by Dallas-Ft. Worth, which has generated just under 23,000. In addition, two other Texas metros are among the top 15: Austin at #5 and San Antonio at #12.

Phoenix and Atlanta, respectively the third and fourth largest metro areas by number of permits issued in 2021, have combined for 31,000. These two metros dominated about 20 years ago, but have since been eclipsed by growth within the state of Texas.

Florida is the only other state with more than one metro among the top 15: Tampa ranks #6, and Orlando comes in 9^th.

Rounding out the top 15 markets are New York and Denver, each with approximately 5,600 single-family permits through May. Understandably, most of the New York metro single-family units are not being built in the five boroughs of New York City itself, but rather in the Long Island or New Jersey portions of the metro area.

Among the 369 metros are a large number of smaller cities that have issued few permits this year. A third of all metros have issued less than 120 permits apiece through May, and there are about 30 that have issued fewer than 10.

Figure 2 shows the percentage growth in single-family permits issued in each of the top 15 metro areas. It ranges from a high of 64% in San Antonio to a low of 18% in Washington D.C.

Growth in only two of these metros — San Antonio and Atlanta — exceeds the average 48% growth of all 369 metro areas.

The average metro-area growth is larger than the national growth because there are many metros in which a small increase in the number of units has led to a very large percentage gain. For example, the comparatively small metro of Peoria, Ill., has issued 27 single-family permits this year, 15 more than in 2020, leading to a 125% increase.

The top single-family markets are not necessarily the highest new multifamily markets, although there are several metros that appear among the top 15 for both.

Three of the top five markets in total number of single-family housing permits issued are located in Texas.

Figure 3 displays the top 15 multifamily markets. New York, the leading multifamily market this year, is also among the top 15 single-family markets.

Austin, Dallas and Houston, three of those top 15 single-family markets, are also among the top 15 multifamily markets.

Phoenix, Denver, Nashville and Orlando round out the list of metros appearing in both segments.

While each of the top 15 single-family markets grew this year, that is not the case for the multifamily sector. Figure 4 reveals that three of the top 15 in multifamily units have actually issued fewer permits this year than in 2020.  Two are in Florida, with Miami 18% behind 2020 through May, and Orlando off by 10%. Houston is the third top-15 multifamily market that has decreased in number this year, with 40% fewer permits issued so far.

Charts: