New home construction trailing job growth
The goal was to determine whether homebuilding has kept up with the steadily improving pace of job growth in the past three year. The findings reveal that homebuilding activity for all housing types is underperforming in roughly two-thirds of measured metro areas.
NAR's study analyzed job creation in 146 metro areas from 2012 to 2014 relative to single-family and multifamily housing starts over the same period. Historically, the average ratio for the annual change in total workers to total permits is 1.2 for all housing types and 1.6 for single-family homes.
The research found that through 2014, 63 percent of measured markets had a ratio above 1.2 and 72 percent had a ratio above 1.6, which indicates inadequate new construction.
According to Yun, with jobs now being added at a more robust pace in several metro areas, the disparity between housing starts and employment is widening. In 2014 alone, the average ratio of single-family permits to employment jumped to 3.7, while the ratio for total permits increased 50 percent to 2.4.
The markets with the largest disparity of jobs versus home construction (single-family) and currently facing supply shortages are San Jose, Calif., at 22.6; San Francisco, 22.4; San Diego and New York, at 13.9; and Miami, 11.1.
Single-family housing starts are seen as nearly adequate to local job growth (a ratio of 1.6) in Jackson, Miss.; Colorado Springs, Colo.; Chattanooga, Tenn.; Amarillo, Tex.; and St. Louis. ■