Phoenix No. 4 in U.S. for new home construction, but permits down 23%
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With a tight housing market for existing homes, the demand for new home construction is growing as homebuyers seek more options.
But which cities have the most new home construction in 2023?
- According to a new analysis by ChamberofCommerce.org, new home construction is booming in metropolitan Phoenix.
- The study analyzed building permit data for new residential construction from the U.S. Census Bureau and the Department of Housing and Urban Development (HUD).
DEEPER DIVE: Here’s the salary needed to buy a home in Phoenix
- Average monthly new home permits in 2023: 3,459
- New single-family homes: 6,597
- Multi-unit residential homes: 7,238
- Total new homes in 2023: 13,835
Despite leading the nation in new home construction, the number of new homes is still down in Phoenix by 23.2% compared to this time last year. - AZ BigMedia
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A record number of Americans are strained by housing costs, report says
Published: Wednesday, June 21, 2023 - 2:56pm
Updated: Wednesday, June 21, 2023 - 3:15pm
Download mp3 (1002.42 KB)A new report shows even as high interest rates slow the growth of home prices nationwide, more American households are cost-burdened than ever before. And Arizona is among the hardest-hit states.
In its 2023 State of the Nation's Housing report, the Joint Center for Housing Studies at Harvard University finds a record number of Americans are now having to put more than 30% of their income toward housing.
In its 2023 State of the Nation's Housing report, the Joint Center for Housing Studies at Harvard University finds a record number of Americans are now having to put more than 30% of their income toward housing.
- In the Phoenix area, nearly a third of households are cost-burdened.
- The expiration of pandemic-era eviction protections is adding strain to nationwide housing and affordability crises, said Daniel McCue, Joint Center for Housing Studies senior research associate.
The report identifies Arizona as one of the states that saw the largest jumps in homelessness in that timeframe.
Real EstateAccording to a new analysis by ChamberofCommerce.org, new home construction is booming in Metropolitan Phoenix.Here’s a look. |
Do you believe that new multifamily starts spiked to a 36-year high in May 2023? The Census just reported 58,500 new units started nationally, up 41% from April. Personally, I do not believe it -- and my guess is most apartment developers, builders, investors and construction lenders do not either. But I'd love to hear/read perspectives on what others are seeing and whether these numbers could be accurate.
Here is why I'm skeptical:
1) Anecdotally, I've heard more stories of stalled apartment projects than at any point since the Great Financial Crisis. Not just delayed due to supply chain or labor issues. But stalled altogether due to difficulty securing construction financing and/or equity.
2) We know banks play a major role in construction financing, and we know from various surveys (NMHC's construction survey and the Federal Reserve's Senior Loan Officer survey) that banks are pulling back significantly on new construction loans -- perhaps at the sharpest rate since the GFC -- as many banks are either fully allocated to the sector or pulling back to preserve cash due to regulatory pressure. The cost of debt is high, and loan-to-cost ratios have plunged. That means that even if you find willing lenders, you still need to raise a lot more equity -- which is no easy task in 2023.
3) While May 2023 starts are deals that would have been financed months ago, the financing issues began in latter part of last year as rates soared. So while starts numbers would naturally lag more than single-family starts would (single-family builders can much more quickly ramp up/down since each home is a dramatically smaller project), the May numbers are just too much and too late to pass the sniff test.
4) One possibility is that the Census numbers are just lagged.
We have routinely tracked more ongoing apartment construction in the past couple years than what the Census has reported for multifamily overall -- which suggests the Census has just missed projects. Perhaps there's some catch-up occurring where Census start dates are materially lagged for a chunk of deals. Or maybe the Census methodology is just wrong. I need to dig in more on that.
5) I'd still bet that actual multifamily starts drop 40%+ this year versus last year -- regardless of what the Census reports. It's just too difficult an environment today to maintain 2022's blistering pace.
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