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Where Residential Construction Thrives: Metro Area Hotspots for Jobs and Businesses

Jing Fu2024-12-04T08:17:00-06:00

The residential construction industry plays a crucial role in driving economic growth and local community development. It has a lasting impact on local communities by creating jobs, improving infrastructure, boosting local businesses, and enhancing property values. The residential construction industry is more reliant on labor than capital in the United States. As of October 2024, about 3.4 million people work in the residential construction industry in the United States, with 957,000 builders and 2.4 million residential specialty trade contractors. The NAHB analysis of the Quarterly Census of Employment and Wages (QCEW) data provides an insight into employment and establishment concentration1 of the residential construction industry across metro areas (MSA). Location quotients (LQ)2 are ratios3 that compare the concentration of the residential construction industry within a metro area to the concentration of the industry nationwide. LQs are used in this article to evaluate the employment and establishment concentration of the residential construction industry in local areas. Employment The March 2024 QCEW data indicates that employment in the residential construction industry, while found throughout the country, was more highly concentrated in some metro areas than others. Among 387 metro areas, employment LQs ranged from 0.02 to 3.99. Cape Coral-Fort Myers, FL had the highest employment concentration of the residential construction industry with an LQ of 3.99. It was followed by Naples-Marco Island, FL (LQ: 3.47) and Bozeman, MT (LQ: 3.12). Florida, experiencing a rapid growth in population, reported a relatively high employment concentration in residential construction. All metro areas in Florida had a higher employment concentration than the nation’s concentration. Moreover, half of the top ten metro areas with the highest employment concentrations of the residential construction industry were in Florida. Various metro areas in the Mountain Division also have a high reliance on the residential construction industry for employment. Bozeman, MT (LQ: 3.12), St. George, UT (LQ: 3.03), Coeur d’Alene, ID (LQ: 2.51), and Provo-Orem-Lehi, UT (LQ: 2.35) were ranked in the top ten markets with a higher employment concentration of the residential construction industry. Metro areas in the South reported the three lowest employment LQs of the residential construction industry. The lowest was Owensboro, KY with a LQ of 0.02, followed by Dalton, GA (LQ: 0.03) and Eagle Pass, TX (LQ: 0.05). Establishment On aggregate, New York-Newark-Jersey City, NY-NJ, Los Angeles-Long Beach-Anaheim, CA, and Miami-Fort Lauderdale-West Palm Beach, FL were the three metro areas that not only had the most employment in residential construction but also had the largest number of residential construction establishments among all metro areas. However, these three metro areas didn’t have higher establishment concentrations of the residential construction industry than the nation. Among all the 387 metro areas, 104 of them had a higher establishment concentration of the residential construction industry than the nation. St. George, UT had the highest establishment concentration of the residential construction industry, which was more than three times that of the nation, followed by Barnstable Town, MA (LS: 2.42) and Cape Coral-Fort Myers, FL (LQ: 2.38). The three metro areas in the South that reported the lowest employment LQs of the residential construction industry also had the lowest establishment LQs of the residential construction industry. For more information on QCEW, please check the “Handbook of Methods” published by BLS. The employment/establishment concentration of the residential construction industry in this article refers to the share of residential construction employment/establishment relative to the overall industry employment/establishment in a geographic region.QCEW Location Quotient Details: https://www.bls.gov/cew/about-data/location-quotients-explained.htm#:~:text=LQs%20are%20calculated%20by%20first,divided%20by%20the%20national%20ratio.A LQ equal to one means that the share of employment/establishment in the residential construction industry in a specific metro area is the same as the share of employment/establishment in the residential construction industry nationally. If the LQ is greater than one, the local share of employment/establishment in the residential construction industry exceeds the national share of employment/establishment in the residential construction industry. If it is less than one, the local share of employment/establishment in the residential construction industry is less than the national share. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Where Residential Construction Thrives: Metro Area Hotspots for Jobs and BusinessesJing Fu2024-12-04T08:17:00-06:00

Gains for Townhouse Construction

Robert Dietz2024-11-19T11:21:30-06:00

Year-over-year gains for townhouse construction continued during the third quarter of 2024 as demand for medium-density housing continues to be solid despite slowing for other sectors of the building industry. According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, during the third quarter of 2024, single-family attached starts totaled 47,000, matching the highest quarterly count for townhouse construction since mid-2006. Over the last four quarters, townhouse construction starts totaled a strong 177,000 homes, which is 20% higher than the prior four-quarter period (148,000). Townhouses made up 18% of single-family housing starts for the third quarter of the year, a data series high. Using a one-year moving average, the market share of newly-built townhouses stood at 17.4% of all single-family starts for the third quarter. With recent gains, the four-quarter moving average market share remains at the highest on record, for data going back to 1985. Prior to the current cycle, the peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when the percentage reached 14.6%, on a one-year moving average basis. This high point was set after a fairly consistent increase in the share beginning in the early 1990s. The long-run prospects for townhouse construction are positive given growing numbers of homebuyers looking for medium-density residential neighborhoods, such as urban villages that offer walkable environments and other amenities. Where it can be zoned, it can be built. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Gains for Townhouse ConstructionRobert Dietz2024-11-19T11:21:30-06:00

Student Housing Construction Investment Rises in the Third Quarter of 2024

Na Zhao2024-11-05T08:15:33-06:00

Private fixed investment in student dormitories increased by 2.2% to a seasonally adjusted annual rate (SAAR) of $3.9 billion in the third quarter of 2024. This rise follows a 7% decrease in the prior quarter. However, private fixed investment in dorms was 1.8% lower than a year ago, as the elevated interest rates place a damper on student housing construction. Private fixed investment in student housing experienced a surge after the Great Recession, as college enrollment increased from 17.2 million in 2006 to 20.4 million in 2011. However, during the pandemic, private fixed investment in student housing declined drastically from $4.4 billion (SAAR) in the last quarter of 2019 to a lower annual pace of $3 billion in the second quarter of 2021, as COVID-19 interrupted normal on-campus learning. According to the National Student Clearinghouse Research Center, college enrollment fell by 3.6% in the fall of 2020 and by 3.1% in the fall of 2021. Since then, private fixed investment has rebounded, as college enrollments show a slow but stabilizing recovery from pandemic driven declines. Effective in-person learning requires college students to return to campuses, boosting the student housing sector. Furthermore, the demand for student housing is growing robustly, because total enrollment in postsecondary institutions is projected to increase 8% from 2020 to 2030, according to the National Center for Education Statistics. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Student Housing Construction Investment Rises in the Third Quarter of 2024 Na Zhao2024-11-05T08:15:33-06:00

Share of Young Adults Living with Parents by Congressional District

Fan-Yu Kuo2024-11-01T12:25:29-05:00

Building on the post-pandemic trend, the share of young adults living with their parents fell to a decade low, according to NAHB analysis of 2022 American Community Survey (ACS). However, young adults continue to face difficult decisions about their living arrangements due to elevated home prices and increasing costs of living. While some young people established independent households during the pandemic, according to 2023 ACS data, many young adults continue to live with their parents in higher-cost areas, with variations across states and congressional districts. In general, the share of young adults (aged 18-34) living with parents positively correlates with housing costs, particularly in coastal areas. This trend reflects young adults’ increasing financial burdens as both rents and home prices surge. A previous post demonstrated that more than half of renter households spend 30% or more of their income on housing, suggesting that affordability issues may delay young adults’ independence and path to homeownership. In 2023, 31.8% of young adults lived with their parents at the national level. Across congressional districts, the share of young adults living with parents varies significantly, reflecting different local housing affordability challenges. The top five congressional districts with the highest shares of young adults living with parents are located in areas with high housing costs and limited rental options. These districts include: New York, District 3, 58.6% New York, District 4, 56.5% New York, District 1, 56.5% California, District 38, 54.0% New Jersey, District 5, 53.4% In contrast, the bottom five congressional districts with the lowest shares of young adults living with parents are in major cities known for high housing costs, low homeownership rates and robust rental markets. As rental options provide more independence, a higher share of renter households in California, New York and Washington appears to be associated with fewer young adults living with parents. The bottom five districts include: New York, District 12, 8.4% Texas, District 37, 9.6% California, District 11, 11.6% Washington, District 7, 11.7% District of Columbia, At Large, 12.2% Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Share of Young Adults Living with Parents by Congressional DistrictFan-Yu Kuo2024-11-01T12:25:29-05:00

Mortgage-Free Homeowners by Congressional Districts

Na Zhao2024-10-25T13:29:26-05:00

As of 2023, nearly 40% of homeowners in the United States are mortgage-free, the highest level seen in the past 13 years. With elections approaching, it is valuable to analyze the share of mortgage-free homeowners across congressional districts, as these patterns often provide insights into the local housing market as well as demographic shifts. Both the number and the share of homeowners without mortgages have steadily increased since 2010, according to the 2023 American Community Survey. In 2010, around 32.8% of homeowners, or 24.5 million households, were mortgage-free. By 2023, this number had increased to 39.8% of homeowners, with 34.1 million homeowners having fully paid off their mortgages. Over the past 13 years, the share of mortgage-free homeowners has reached a record high level. Older homeowners are more likely to have fully paid off their mortgages. In 2023, two-thirds of the mortgage-free homeowners are baby boomers aged 60 years and over. In contrast, only 5% of mortgage-free homeowners are under 35 years old, 8% are between 35 and 44 years old, 11.9% are aged 45 to 55, and 8.9% are between 55 and 59. The share of mortgage-free homeowners varies substantially across the congressional districts. Districts with more affordable housing or a higher proportion of older populations tend to have a higher percentage of mortgage-free homeowners. The top 5 congressional districts for mortgage-free homeownership are primarily located in Southern states such as Texas, West Virginia, Kentucky, Mississippi, where lower housing costs or favorable weather attract older residents. As of 2023, Texas’s 34th district had the highest share of mortgage-free homeowners in the nation. Following closely, West Virginia’s 1st district had 61.2% of homeowners living mortgage-free, while Kentucky’s 5th district had a mortgage-free rate of 60.2%, Mississippi’s 2nd district had 58.7%, and Texas’s 29th district had 56.7%. In contrast, districts with younger populations, higher levels of urbanization and less affordable housing tend to have lower shares of mortgage-free homeowners. The five congressional districts that struggle the most with low rates of mortgage-free homeowners include Maryland’s 5th district (20.8%), Virginia’s 10th district (22.6%), the District of Columbia’s Delegate District at Large (22.7%), Virginia’s 7th district (22.6%) and California’s 37th district (20.8%). Additional housing data for your congressional district are provided by the US Census Bureau here. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Mortgage-Free Homeowners by Congressional DistrictsNa Zhao2024-10-25T13:29:26-05:00

Homeownership Rates for Young Adults

Fan-Yu Kuo2024-10-24T13:18:38-05:00

With housing affordability at a multidecade low, housing costs have become a major issue in the 2024 presidential election. While NAHB reports the national homeownership rate from the Census Bureau’s Housing Vacancy Survey on a quarterly basis, examining characteristics across congressional districts provides valuable insights. A recent NAHB analysis of 2023 American Community Survey shows about two-thirds (65.2%) of US households are homeowners, yet there are forty congressional districts where renters represent the majority. Another NAHB post found that in the second quarter of this year the homeownership rate for households under the age of 35 has dropped to its lowest level in four years, as higher mortgage rates and low inventory have made affordability a bigger challenge for first-time buyers. As the largest cohort of millennials reach peak homebuying years, it is important to take a closer look at homeownership rate for those under age 35. This post will focus on comparing the homeownership rates of young adults (under 35) across congressional districts using 2023 ACS data. The map below illustrates variation in young adults’ homeownership rates across congressional districts, ranging from 5.2% to 65.6%. In general, young adults’ homeownership rates tend to follow a distinct pattern with respect to the overall homeownership rate, particularly in the top five districts with the highest homeownership rates and the bottom five with the lowest. Table 1 shows that the top five districts with the highest young adults’ homeownership rate also have overall homeownership rate above 80%. However, the share of young adults in the top two districts is relatively low. In New York’s 1st and 4th district, 65% of young adults are homeowners, but they only make up only 8.9% and 9.8% of the overall population. Following that, Michigan’s 9th and 2nd districts have the third and fourth highest young adults’ homeownership rates above 60%. Table 1Congressional DistrictYoung Adults Homeownership RateOverall Homeownership RateYoung Adults Share of PopulationNew York, District 165.6%83.8%8.9%New York, District 465.2%80.7%9.8%Michigan, District 965.2%84.9%14.1%Michigan, District 261.0%82.4%17.3%Maryland, District 559.3%81.7%13.2% Table 2 shows the bottom five districts with the lowest young adult homeownership rates. Like the top five districts, those with the lowest young adult homeownership rates also tend to have lower overall homeownership rates. Among the bottom 15 districts, most are in New York and California, with only the 15th lowest in Washington, D.C. The West coast, in general, tends to have lower homeownership rates. Table 2Congressional DistrictYoung Adults Homeownership RateOverall Homeownership RateYoung Adults Share of PopulationNew York, District 135.2%12.8%20.4%California, District 347.5%22.0%24.8%New York, District 157.9%15.9%18.3%New York, District 78.2%22.0%33.0%California, District 308.7%30.1%24.4% Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Homeownership Rates for Young AdultsFan-Yu Kuo2024-10-24T13:18:38-05:00

Second Homes by Congressional Districts

Na Zhao2024-10-24T10:20:23-05:00

In 2023, the total number of second homes was 5.7 million, accounting for 4% of the total housing stock, according to NAHB estimates of the 2023 American Community Survey. Second homes have been in a steady decline over the past few years, from 7.15 million in 2020, to 6.5 million in 2022, dropping to 5.7 million in 2023. The distribution of second homes across the U.S. reveals important geographic patterns, particularly when examined at the congressional district level. This analysis focuses on the number and the location of second homes qualified for or defined by the home mortgage interest deduction using the Census Bureau’s 2023 American community Survey (ACS). It does not account for homes held primarily for investment or business purposes. Half of the nation’s second homes are concentrated in a small number of congressional districts, primarily in these states: Florida, California, New York, Texas, Michigan, North Caroline, Pennsylvania, and Arizona. Florida alone accounted for 15.8% of all second homes, with 16 out of its 28 congressional districts having more than 25,000 second homes each. Florida’s 19th Congressional District had the largest stock of second homes, with 123,853 units. In contrast, Wyoming’s At Large Congressional District had the smallest stock, with 17,623 second homes. Analysis of congressional district data shows that second homes are not just concentrated in conventional coastal and resort areas. Second homes make up a significant portion of the housing stock in various districts across the country. Michigan’s 1st Congressional District had the highest share of second homes, with 24.5% of its housing stock qualified as second homes. Wisconsin’s 7th Congressional District had 82,755 second homes, almost 20% of its total housing stocks. While some congressional districts have a higher percentage of second homes, many other congressional districts also show a notable prevalence of second homes. In 2023, 32 congressional districts in 17 states had at least 10% of housing units that were second homes. Of these congressional districts, 8 congressional districts were in Florida, 4 in New York, 3 in California, and 2 in Maine, Michigan, North Carolina, and 1 congressional district each in Arizona, Colorado, Hawaii, Maryland, Massachusetts, Minnesota, New Jersey, Pennsylvania, South Carolina, Vermont, Wisconsin. NAHB estimates are based on the definition used for home mortgage interest deduction: a second home is a non-rental property that is not classified as taxpayer’s principal residence. Examples could be: (1) a home that used to be a primary residence due to a move or a period of simultaneous ownership of two homes due to a move; (2) a home under construction for which the eventual homeowner acts as the builder and obtains a construction loan (Treasury regulations permit up to 24 months of interest deductibility for such construction loans); or (3) a non-rental seasonal or vacation residence. However, homes under construction are not included in this analysis because the ACS does not collect data on units under construction. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Second Homes by Congressional DistrictsNa Zhao2024-10-24T10:20:23-05:00

Manufactured Homes: Shipments, Prices, and Characteristics in 2023

Catherine Koh2024-10-07T09:17:15-05:00

New manufactured homes saw a decline in shipments in 2023 compared to the previous year. According to the Manufactured Housing Survey (MHS), 89,169 manufactured homes were shipped in 2023, a decrease of 21% from the 112,882 homes shipped in 2022. The Census defines a manufactured home as a movable dwelling, 8 feet or more wide and 40 feet or more long, designed to be towed on its own chassis, with transportation gear integral to the unit when it leaves the factory, and without need of a permanent foundation. No building permit is required for a manufactured home. Despite the 2023 decline, the ratio of shipments to new single-family site-built home construction starts remained consistent between 1 to 9 and 1 to 10. In 2023, that number was 1 to 10, meaning that for every new manufactured home shipped, 10 new single-family site-built homes started construction. Of the total 2023 shipments, 35.7% (31,830 homes) were either sold or leased, while 2022 saw 46,696 (49%) being sold or leased. Regionally, the South continued to receive the majority of shipments at 66%. The Midwest followed with 14%, the West with 11%, and the Northeast with 6%. Texas remained the leading state for shipments, accounting for 15,073 homes, which represents 17% of the total. Altogether, the top ten states comprised over 60% of the shipment share, highlighting a concentrated market presence. Breaking down the types of manufactured homes shipped, 45% were single-section units. These homes had an average sales price of $84,800 and an average area of 1,038 square feet, translating to a price of $81.70 per square foot. In contrast, 54% of the shipments were multi-section homes, with an average sales price of $154,100 and a larger area of 1,748 square feet, equating to $88.16 per square foot. When compared to new single-family site-built homes started in 2023, which had an average price of $165.94 per square foot (excluding land value), multi-section manufactured homes are approximately 1.9 times less expensive per square foot. Out of the total homes shipped, 70% (59,950 homes) were placed at their final destinations. Among the placed homes, 21% were titled as real estate property, while the majority, 76%, were classified as personal property. Additionally, only 29% of the placed homes were situated within a manufactured housing community. Census doesn’t have an official definition of a manufactured housing community, but as an example of the industry’s term of art, Law Insider defines it as “any area where two or more manufactured home lots are leased specifically for the use of manufactured homes”. Looking into other characteristics of placed manufactured homes, over half (57%) had concrete footings. Pressure-treated wood and monolithic-slab foundations comprised 12% each, and basement or crawl space foundations was 4%. For homes not placed on concrete or slab foundations, the most common type of pier is concrete block (77%) while the majority (84%) were secured using anchors and tie-down straps, and 11% utilizing anchors and alternative foundations. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Manufactured Homes: Shipments, Prices, and Characteristics in 2023Catherine Koh2024-10-07T09:17:15-05:00

Two-Story Foyer Trend Declines in 2023

Fan-Yu Kuo2024-10-03T10:15:08-05:00

In 2023, a quarter of new homes were built with a two-story foyer, down slightly from 26% in 2022, according to data obtained from the Census Bureau’s Survey of Construction (SOC) and tabulated by NAHB. The market share of two-story foyers has been generally trending downward over the past seven years, with most new single-family homes being built without a two-story foyer nationally and regionally. According to the Census, a two-story foyer is defined as the entranceway inside the front door of a house and has a ceiling that is at the level of the second-floor ceiling. In the United States, the share of new homes with two-story foyers fell from 26% to 25% in 2023, closer to the low level seen in 2021. This feature is often considered energy-inefficient and is seen as undesirable by both builders and buyers. The declining trend is in line with NAHB’s What Home Buyer’s Really Want, in which recent and prospective buyers rated their preference for 18 specialty rooms. The study found that two-story entry foyers was one of the least desired specialty rooms, with 32% buyers likely to reject a potential home with this feature, and only 13% seeing it as an essential/must-have feature. Regionally, the share declined in five of the nine divisions. The decline was particularly pronounced in West South Central and New England, reversing the notable increases seen in 2022. In both divisions, the shares have now returned closer to their 2021 levels. The Middle Atlantic and West North Central were the only two divisions to see an increase in the share of two-story foyers from 2022 to 2023, with both shares reaching their highest levels since 2017. Meanwhile, shares in the South Atlantic and Pacific remained unchanged in 2023. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Two-Story Foyer Trend Declines in 2023Fan-Yu Kuo2024-10-03T10:15:08-05:00

Homeownership Rates of Family Households

Catherine Koh2024-09-25T11:16:38-05:00

The homeownership rate for multigenerational households increased by 4.9 percentage points (pp) over the last decade, but there’s another household type that experienced an even larger increase in the homeownership rate over the same period—single parent households. In further analysis of the Census’s American Community Survey (ACS) data, NAHB dives deeper into the homeownership rate for other family household types: married couples with no children, married couples with children and single parent households. In 2022, most family households were married with no children (44%), followed by married with children (26%), single parents (12%), others (12%), and multigenerational families (6%). This composition has not changed much, with the exception of a gradual decrease in the share of married with children and single parent households, which is offset by an increase in the share of married with no children households. The homeownership rate for single parent households saw the largest gains in homeownership rate with an increase of 5.7 percentage points over the decade. However, the overall level of homeownership rate for single parent households remains the lowest among all other family household types at just 41%. Another group that saw a large increase was the married couple with children households, with a 4.5% increase over the decade from 73% to 78%. Like multigenerational households, these increases were spurred on by historically low mortgage rates in 2021. The only household type to have plateaued was married without children. As a matter of fact, these households saw decreasing homeownership rates for a few years before creeping back up to be at roughly the same rate as they were ten years ago at 84%. Nonetheless, married without children households remain as the group with the highest homeownership rate with an average rate of 84% over the decade. We also examined the estimated home price-to-income ratio (HPI) for various household types. To calculate the home prices for recent homebuyers we used the median property value for owners who moved into their property within the past year. Here is where we see the effect of how multigenerational households were able to lower their HPI with pooled income and budgets. In contrast are single parent households with their estimated home prices approaching five times their income, indicating that these households are significantly burdened by housing costs. Given that homeownership rates jumped in recent years for most household types despite increases in home prices suggests that the low mortgage rates in 2021 made steep home prices more palatable for homebuyers to enter the market. However, it is unlikely that we’ll see a continued increase in homeownership while mortgage rates remain elevated. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Homeownership Rates of Family HouseholdsCatherine Koh2024-09-25T11:16:38-05:00

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