Homebuilders across the nation this year are signaling that the worst of the housing crisis is over. Builder confidence has climbed higher for three consecutive months to near post-bubble highs, while construction on new homes is ahead of last year’s pace. However, the recovery is not level, and only a few states account for the country’s strongest housing markets.
Using building permit data from the U.S. Census Bureau for the first half of 2014, Trulia analyzed which metros are recovering the most when compared to their own historical annual average level of permits from 1990 to 2013. The top 10 performing markets are located in only five states, while the hardest-hit markets are still lagging in homebuilding. In fact, no market that suffered at least a 40 percent price drop during the housing crisis is back to normal construction levels.
“Construction activity is a fundamental measure of local housing market health. That’s because homebuilding is both a signal of where builders are betting on future housing demand as well as a creator of local jobs,” said Jed Kolko, Trulia’s chief economist. “In this housing recovery, construction might even be a better measure of local market health than home price changes, which have been driven in part by investors and others buying undervalued homes.”
Let’s take a look at the hottest housing markets in the country for homebuilders. Interestingly, since rental construction is a large source of homebuilding, these markets are not necessarily experiencing rapid price gains.