Editor's Note: This story originally appeared on Stessa.
The release of updated Consumer Price Index data in November provided new evidence that the U.S. economy is in an inflationary period. The CPI rose by 6.2% from October 2020 to October 2021, the highest annual rate in three decades. Rising costs have shown up in many sectors of the economy, including energy, transportation, and food, but perhaps the most worrying increase is in the cost of housing.
Price increases in the housing market have been one of the major stories of the economy since the start of the pandemic. In the residential real estate market, the median sales price for a home in the U.S. has grown by around 20% over the last 12 months. For renters, the median rent has increased by 16% since the beginning of 2021.
One of the key factors behind rising housing costs has been insufficient supply. In the summer of 2020, the inventory of homes for sale fell to all-time lows, and while inventory of existing homes has since rebounded to pre-pandemic levels, new construction is not keeping up with demand. Supply chain challenges have made many materials harder to find or more expensive, and many construction businesses are still struggling to fill jobs.
As a result, new housing starts are up, but completions have not kept pace. But while the pandemic has put additional pressure on the housing market, supply was already too low in many areas to keep up with population growth and consumer demand. The Federal Home Loan Mortgage Corporation estimated in 2018 that the U.S. had a housing deficit of 2.5 million units.
To find the states building the least new housing relative to job growth, our team of researchers analyzed building permit data from the U.S. Census Bureau and employment data from the Bureau of Labor Statistics. Read to the end for our methodology.
Here are the states where housing development has struggled to keep pace with job growth.
10. Texas
- Total jobs added per new housing unit (2010–2020): 1.13
- Total jobs added (2010–2020): 2,012,500
- Total housing units authorized by building permits (2010–2020): 1,785,551
- Share of new housing units that are multi-family (2010–2020): 35.9%
9. Florida
- Total jobs added per new housing unit (2010–2020): 1.19
- Total jobs added (2010–2020): 1,337,800
- Total housing units authorized by building permits (2010–2020): 1,128,362
- Share of new housing units that are multi-family (2010–2020): 33.0%
8. Washington
- Total jobs added per new housing unit (2010–2020): 1.23
- Total jobs added (2010–2020): 501,980
- Total housing units authorized by building permits (2010–2020): 406,829
- Share of new housing units that are multi-family (2010–2020): 46.8%
7. Colorado
- Total jobs added per new housing unit (2010–2020): 1.24
- Total jobs added (2010–2020): 420,310
- Total housing units authorized by building permits (2010–2020): 337,844
- Share of new housing units that are multi-family (2010–2020): 38.9%
6. Georgia
- Total jobs added per new housing unit (2010–2020): 1.24
- Total jobs added (2010–2020): 563,860
- Total housing units authorized by building permits (2010–2020): 453,134
- Share of new housing units that are multi-family (2010–2020): 24.8%
5. Arizona
- Total jobs added per new housing unit (2010–2020): 1.33
- Total jobs added (2010–2020): 467,990
- Total housing units authorized by building permits (2010–2020): 351,855
- Share of new housing units that are multi-family (2010–2020): 27.2%
4. Oregon
- Total jobs added per new housing unit (2010–2020): 1.36
- Total jobs added (2010–2020): 237,250
- Total housing units authorized by building permits (2010–2020): 174,610
- Share of new housing units that are multi-family (2010–2020): 43.0%
3. Massachusetts
- Total jobs added per new housing unit (2010–2020): 1.44
- Total jobs added (2010–2020): 230,700
- Total housing units authorized by building permits (2010–2020): 159,840
- Share of new housing units that are multi-family (2010–2020): 54.2%
2. Utah
- Total jobs added per new housing unit (2010–2020): 1.57
- Total jobs added (2010–2020): 340,500
- Total housing units authorized by building permits (2010–2020): 217,255
- Share of new housing units that are multi-family (2010–2020): 30.6%
1. California
- Total jobs added per new housing unit (2010–2020): 2.54
- Total jobs added (2010–2020): 2,428,930
- Total housing units authorized by building permits (2010–2020): 957,215
- Share of new housing units that are multi-family (2010–2020): 49.8%
Methodology
To find the states building the least new housing relative to job growth, researchers at Stessa analyzed building permit data from the U.S. Census Bureau’s Building Permits Survey (BPS) and employment data from the Bureau of Labor Statistics’ (BLS) Occupational Employment and Wage Statistics (OEWS).
Researchers calculated the total number of new housing units authorized by building permits between 2010 and 2020, as well as the total number of jobs added over that span in each state.
States were ranked according to the total number of jobs added per new housing unit. Researchers also included the share of new housing units that are multi-family in each state.
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