The housing market and housing construction as of late has left many on the consumer and business sides a little dazed and confused. While the market has always been in a state of flux, recently the complications have grown. With inflation rising and issues in construction supply chains, it’s been hard to track and understand the trends in data.
The best way to determine the macro-trends at play in these complicated times is to look at the historical data to see the bigger picture. Point2’s new report analyzes historical data on permits, completed and started units, along with employment, incomes, and business data to understand how housing construction and construction employment trends have evolved over the past decade.
Key highlights:
- From 2012 to 2022, an average of 2,971 homes were completed and 3,513 permits were issued on a daily basis.
- Total permits went from over 1 million in 2014 to a drop in 2022. The drop in total permits recorded is almost entirely due to the decrease in permits for single-family homes.
- Although the number of housing starts also dropped in 2022, the number of completed units kept steadily increasing.
- With minor fluctuations, the average square footage of completed and started single-family homes increased until 2015, when it started decreasing. Then, probably due to the pandemic and the need for more space it brought about, single-family home starts in 2021 saw their average square footage go up by quite a lot: from 2,473 the previous year to 2,532.
- In 2012, there were 5.6 million construction employees, representing 4.24% of the entire workforce at the national level. That number climbed continuously, with only a minor, pandemic-induced dip in 2020.
- The average income for construction employees has been increasing steadily since 2012. Although construction income has been incrementally higher than the national average income, the gap seems to be closing.
- The total number of construction businesses has been increasing, with an especially significant jump in net numbers in the years immediately following the pandemic, 2021 and 2022.
- Texas, Florida and California are the top three states with the highest number of permits issued: Together, they make up for more than a third of the total number of permits issued in 2022. What’s more, these states have been dominating the rankings in the last decade.
- At metro level, Dallas, Houston and New York steal the show, with the most permits issued in 2022 of all of the 384 metros included in the analysis.
- The New York, Los Angeles and Houston metros have the highest number of construction employees, but metros like Lake Charles, Louisiana; St. George, Utah; Cape Coral-Fort Myers, Florida; Naples-Marco Island, Florida; Baton Rouge, Louisiana; Greeley, Colorado; Provo-Orem, Utah and The Villages, Florida have the highest shares of construction employees out of the total number of employed people in the metro, all above 10%.
Major takeaway:
“Despite a drop in the number of permits issued, 2022 has been a strong year for home building. After being pummeled by the pandemic and its aftermath, home builders have proven just how adaptable and resilient they are,” said Andra Hopulele, a Senior Real Estate Writer at Point2 and author of the report. “As such, last year may have been a “stop and take stock” moment, the lower number of permits issued at the national level in 2022 indicating a recalibration of effort and resources.”
“Further proof that this really is the case is that completed units have continued to increase, despite the slowdown in permits and housing starts, as well as the many supply chain issues and price challenges. However, this decade-long upward trajectory may start to slow down in light of the most recent banking problems and the lending stress they created, continued Hopulele. “Another significant finding was that the drop in the total number of permits was almost entirely due to the drop in the number of single-family homes permits, while the number of permits for multifamily homes continued to rise. This could mean that rising building costs are forcing developers to focus more on multifamily projects, at the expense of single-family homes and duplexes.”
For the full report, including more in-depth data and charts, click here.
