The 12 Hottest Homebuilding Markets of 2016

by John Egan

When your metro area is one of the fastest-growing in the U.S., the new arrivals -- whether they’re in cribs or in moving trucks -- need roofs over their heads. Such is the case in Raleigh, NC. In fact, so many homes are going up in the Raleigh metro area that it leads our new ranking of the 12 Hottest Homebuilding Markets of 2016.

To produce our ranking, we looked at the number of building permits for single-family homes issued during the first half of 2016 in the country’s 50 largest metro areas. Those statistics come from the U.S. Census Bureau. We then paired the permit figures with Census Bureau population estimates from 2015 to come up with the number of permits per 1,000 residents.

Using this calculation method, we gained a more accurate measure of homebuilding activity than if we had relied purely on the number of permits authorized in each metro area.

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Thousands of new homes are popping up in the Raleigh, NC, metro area.
Photo: Stanton Homes

Population Gains Pump Up Construction

In the Research Triangle region, which includes Raleigh as well as the adjacent Durham-Chapel Hill metro area, construction starts for new homes were up 20 percent in the first half of 2016 compared with the same period last year, according to Metrostudy, a provider of housing and construction data.

Jay Colvin, director of Metrostudy’s Research Triangle region, says: “The Triangle continues to be a leading market in terms of job creation, population growth and housing production … .”

The population of the three-county Raleigh metro area rose 12 percent from 2010 to 2015, while the population of the four-county Durham-Chapel Hill metro area grew 8.7 percent during that period.

New-home starts are up sharply this year in North Carolina’s Research Triangle region.
Photo: Triangle Builders Guild

‘Strong’ Construction Patterns for 2016

In 2015, the Triangle area saw the most new homes constructed since 2008, Metrostudy says. And this year could surpass last year. During the first half of 2016, the region saw 10,775 new-home starts, up 20 percent from the same period in 2015.

Paul Kane, executive vice president of ‎the Home Builders Association of Raleigh-Wake County, says he expects the number of new-home permits issued in his area this year to exceed the number from 2015.

“Homebuilding in the Raleigh area for 2016 continues the strong patterns shown in the past couple of years,” Kane says. “The numbers from 2015 and 2016 show a strong market, but [we believe] there is still room for an even stronger market.”

In the Raleigh, NC, metro area, homebuilders are experiencing labor shortages.
Photo: Flickr/Wisconsin Department of Natural Resources

Shortages of Labor and Lots

What’s holding back further growth? Kane cites labor shortages, along with stepped-up federal regulations that have made development of new-home lots more time-consuming and more expensive.

Another hurdle is the lack of vacant lots available for home development in the Raleigh area.

“The lot shortage is a natural consequence of recovery from the recession of a few years ago,” Kane says. “During the recession, land developers were hit harder, in many cases, than the homebuilders. As a result, many were slow getting back into the development business when the market showed signs of recovery.”

Despite the post-recession lot shortage, several metro areas are seeing a surge in construction permits being issued for single-family homes. Here is our ranking of the 12 Hottest Homebuilding Markets of 2016, based on permit activity during the first half of the year.