The Sunbelt States Lead the Single-Family New Development Race

Rapid job growth has been driving housing construction to new heights in the Sunbelt states. The places with the strongest prospects for new home construction include Tampa Bay/St. Petersburg, Fort Lauderdale, Dallas/Fort Worth, Atlanta, Phoenix, and Houston. The future of Tampa Bay/St. Petersburg looks especially promising for both residents and investors as it has earned ULI’s No. 1 ranking for homebuilding prospects in 2024, rising from No. 9 in 2023 across 81 major U.S. cities. Over the past decade, job growth in this area has nearly doubled the national pace. However, housing affordability remains a challenge, as house prices have surged 66% over the last four years, according to the report.

For other Sunbelt cities facing homebuilding insecurities, single-family rentals have become a saving grace. In Austin, for instance, it’s now 95% more expensive to buy a single-family starter home than to rent one, with a difference of $2,085 per month. High rent prices are pushing long-term residents further from work and commercial areas, as seen in cities like Boise, Idaho. The ULI report also highlights the pressing need for attainably priced housing in high in-migration markets, noting that many builders want to construct smaller homes to meet lower price points. However, municipalities often restrict these developments due to outdated zoning codes requiring large lots and low density or the influence of residents who prefer lower-density housing.

ULI, also calls for home builders to use more “value engineering”, that includes stripping architectural details from home facades to offering vinyl plank flooring instead of tile or wood, but this practice could result in undesirable designs that make it harder for developers to obtain permits from the local government. An excellent example of a city with a strong relationship with its developers is in Myrtle Beach, South Carolina, where they have been able to develop various kinds of housing types to meet the needs of people with a range of incomes. The report states, cities that want to encourage more housing development need to examine their zoning codes.