When talking about construction in the U.S. valuable information can be gained from looking at which areas are building the most. Analysing these numbers can then provide insight into where to focus construction investment, where to move resources, and for the areas with lower numbers, to analyze what is causing the slump in construction demand (earning potential, availability of resources, etc). Though we are focusing on construction here, these numbers also indicate the bigger picture with regard to the health of the housing market and economic growth. Considering that single-family units cost on average about $295k to complete, it is possible to equate total permits with a potential dollar amount injected into the construction industry. We have already looked at construction stats by state, but below we go a little more in depth and look at construction by metropolitan area.
Top 20 metropolitan areas with the highest number of building permits
We have created our map using statistics from the Government Census which looked at the number of private building permits issued by metropolitan area, for 2017. The total number of authorized permits includes single unit structures up to structures with five units or more. It is also important to note that these are privately owned housing units, and so would exclude apartment blocks or residences built by developers.
The map indicates only the 20 metropolitan areas that received the highest number of authorized building permits, while the census included a list of 383 metro areas in total. With Dallas-Fort Worth-Arlington, New York-Newark-Jersey City and Houston-The Woodlands-Sugar Land taking the top three spots with 62,524, 50,578 and 42,395 authorized permits respectively. Considering the bottom three spots in the complete census only had 15(Fairbanks), 20(Wheeling) and 29(Weirton-Steubenville) permits issued, the difference across the board is significant.
| Top 20 metro areas with the Most Building Permits Issued in 2017 | Number of Building Permits |
| 1. Dallas-Fort Worth-Arlington, TX | 62524 |
| 2. New York-Newark-Jersey City, NY-NJ-PA | 50578 |
| 3. Houston-The Woodlands-Sugar Land, TX | 42395 |
| 4. Atlanta-Sandy Springs-Roswell, GA | 33832 |
| 5. Los Angeles-Long Beach-Anaheim, CA | 31084 |
| 6. Phoenix-Mesa-Scottsdale, AZ | 29312 |
| 7. Seattle-Tacoma-Bellevue, WA | 27334 |
| 8. Washington-Arlington-Alexandria, DC-VA-MD-WV | 27265 |
| 9. Austin-Round Rock, TX | 26700 |
| 10. Charlotte-Concord-Gastonia, NC-SC | 22869 |
| 11. Denver-Aurora-Lakewood, CO | 22735 |
| 12. Chicago-Naperville-Elgin, IL-IN-WI | 22132 |
| 13. Nashville-Davidson--Murfreesboro--Franklin, TN | 20631 |
| 14. Miami-Fort Lauderdale-West Palm Beach, FL | 19723 |
| 15. Orlando-Kissimmee-Sanford, FL | 19065 |
| 16. Tampa-St. Petersburg-Clearwater, FL | 18268 |
| 17. San Francisco-Oakland-Hayward, CA | 16952 |
| 18. Portland-Vancouver-Hillsboro, OR-WA | 15983 |
| 19. Minneapolis-St. Paul-Bloomington, MN-WI | 15100 |
| 20. Boston-Cambridge-Newton, MA-NH | 14757 |
What the data means in plain English
It follows that the metropolitan areas with the highest number of building permits are found predominantly in the states with the highest number of building permits, indicated in our previous article, above.
The census broke down the total number of permits into one unit, two units, three and four units and five or more unit builds. Interestingly, the numbers for single unit builds and builds with five units or more are higher in number. While the two and three-four unit build totals were often significantly lower, with only a few areas reaching 15% of single unit builds, and most were far below that. That said, single unit builds is the only area that has had positive growth, with multi-unit builds all indicating a decline compared to previous years. When looking at the potential dollar value as mentioned at the start of this piece, for Dallas-Fort Worth-Arlington, 34,604
single builds alone could equate to a significant injection into the construction industry.
It is necessary to consider what is driving the high number of builds indicated in these top 20 metro areas. Some may be due to a strengthening economy, with consumer expenditure on the rise as the number of jobs increases across the board. On the other hand, If we look at population growth, and population size numbers, also provided by the U.S. Census, the top three spots in our map can be found in the top five metro areas for population size. With Dallas-Fort Worth-Arlington holding top spot for the largest increase in population for the year. These population jumps could also explain the increase in building permit applications, as the new residents need to build to create homes for themselves and their families.
Though there are various reasons for the growth, it is also important to consider whether construction can support said growth. Although overall residential construction is growing, factors such as limited availability of workers and materials, and regulatory cost increases will continue to challenge that growth, according to the NAHB. This is especially true in areas experiencing growth that require infrastructure and housing development.
How the data can be used to move forward
While looking at state totals is helpful to get a general overview of construction trends, the metropolitan areas give a much more focused view of where demand lies and which areas need more or less attention. For instance, if we look at Texas, while Dallas-Fort Worth-Arlington represents the metropolitan area with the highest number of new permits, Victoria has the seventh lowest number out of 383 areas.
Also, these permits simply indicate the intention to build. By comparing these numbers to housing starts, one can assess which areas have a demand for builds, without, for instance, the resources or skills available, leading to a lower number of actual starts or completions. This, in turn, should guide the construction industry toward areas where demand is exceeding supply. Those areas can then be the focus of injections in the industry to meet demand.