Southern and Western markets are the strongest in the country for new home construction, led by South Carolina, North Carolina and Idaho, according to a Realtor.com report that ranks states by volume, affordability and future growth of new construction inventory.
Arizona, Utah, Florida, Delaware, Texas, Tennessee and Georgia are the other states in the top 10 for new construction activity and affordability.
"For prospective buyers interested in purchasing a newly built home, these ten states have more newly built options that are more affordable, and fastest-growing," said Joel Berner, senior economist at Realtor.com. "In other parts of the country, purchasing a newly built home may be more challenging until new construction activity picks up."
Realtor.com ranked each state according to the share of its listings that are new builds, the price per square foot premium on those new builds vs. existing home listings and the number of permits for new single-family homes per capital issued.
New home prices are lower than prices for existing homes across the country, the firm noted. Builders are focusing on smaller footprints and more affordability to meet demand. Homes built in 2024 are 8% smaller than homes built in 2022 but are still bigger than most existing homes, the report said.
"Nationwide, builders have responded to the gap in existing home affordability by building smaller, lower-priced homes and are a major driver of this year's leveling-off of listing prices," said Berner. "In the years since the Great Recession, the pace of household formation in the United States has far exceeded the rate of homebuilding, resulting in a supply shortage of over 7 million single-family homes at the end of 2023. There is a clear and present need for newly built homes to meet the demand for housing, and this construction is an important contributor to overall economic activity."