The state of the U.S. housing market has been one of the defining economic stories of the past two and a half years. Since the beginning of the COVID-19 pandemic, housing has become more expensive for both buyers and renters. Despite recent price drops, both home prices and rental prices remain roughly 30% higher than before the pandemic.
Inadequate housing supply has been a key factor contributing to issues with housing affordability in the U.S. for years. Federal mortgage backer Freddie Mac estimates that the U.S. has a 3.8 million unit shortage of housing. But the pandemic only exacerbated the issue of supply. Housing inventory fell to record lows in 2020. The shift to working, schooling, and socializing from home increased preferences—and competition—for larger, single-family homes among both buyers and renters. In addition, ongoing supply chain challenges and labor shortages have made it difficult for builders to add new stock: building permits and housing starts rose significantly in 2021 and 2022, but completions failed to keep up. And now with higher interest rates, building permits have again declined back to 2019 levels.
Despite these challenges, one promising sign for housing supply is an uptick in planned multi-family home construction. Multi-family housing increases the density and availability of housing units in urban and suburban locations, and it is more efficient and cost-effective to develop than single-family stock. And with more people now returning to their offices, denser housing closer to work and social attractions is regaining its appeal.
Looking at new units authorized by building permits in 2022—as tracked by the U.S. Census Bureau—researchers identified the states and metros building the most multi-family housing.
The analysis found that across the country as a whole, 41.4% of new housing units authorized in 2022 were multi-family, marking the highest level since 1985.
TENNESSEE - In Tennessee, 36.8% of new housing units authorized in 2022 were multi-family units. Nationwide, that's a difference of only 4.2%. Of the already standing housing units across the state, 21.1% are in multi-family structures. The total new single family units in the Volunteer State ring in at 33,213.
RUTHERFORD COUNTY, TN - The Nashville - Murfreesboro - Franklin Metro Statistical Area is ranked at number 26, with 45.4% of all newly authorized housing approved for multi-family structures.
Here is a summary of the rest of the data for Tennessee:
- Share of new housing units authorized in multi-family structures: 36.8%
- Share of existing housing units in multi-family structures: 21.1%
- Total new housing units authorized in multi-family structures: 19,299
- Total new housing units in structures with 2 units: 514
- Total new housing units in structures with 3–4 units: 939
- Total new housing units in structures with 5+ units: 17,846
- Total new single-family units: 33,213
Here are the statistics for the entire United States:
- Share of new housing units authorized in multi-family structures: 41.4%
- Share of existing housing units in multi-family structures: 28.4%
- Total new housing units authorized in multi-family structures: 689,504
- Total new housing units in structures with 2 units: 31,626
- Total new housing units in structures with 3–4 units: 23,205
- Total new housing units in structures with 5+ units: 634,673
- Total new single-family units: 975,584
MORE DETAILS - Multi-family housing plays a crucial role in bolstering housing availability in states with substantial urban populations. Nationally, approximately 28% of the current housing stock falls under the multi-family category, although this figure exhibits significant regional disparities. New York State leads the pack with the highest proportion of existing homes classified as multi-family, standing at 52.5%, followed by Massachusetts (43.1%), Rhode Island (38.6%), Hawaii (36.4%), and New Jersey (36.0%). Conversely, states in the South, Midwest, and Mountain West, which tend to be more rural, have traditionally allocated fewer resources to medium- and high-density housing. For instance, in West Virginia, Idaho, and Mississippi, less than 17% of the existing housing stock comprises multi-family units.
When considering new housing units authorized in 2022, a few notable trends emerge. To start, states with already substantial levels of multi-family housing, such as New York, Massachusetts, and New Jersey, saw a significant uptick in authorizations during this period. In these three states, the proportion of authorized multi-family units surpassed 60% of the total, with New York leading at nearly 74%. Furthermore, in all but nine states, the percentage of new housing units categorized as multi-family exceeded that of the existing housing stock.
Perhaps most interesting, there has been a compelling surge in multi-family home construction in unexpected regions. Areas in the Midwest and West, traditionally characterized by average or below-average concentrations of multi-family housing, have now ascended to the forefront in terms of the proportion of newly authorized multi-family units. This includes states like South Dakota, Washington, Minnesota, Nebraska, Colorado, and Montana, all of which now exceed the 50% mark.
Similar patterns emerge at the local level, where a blend of densely populated coastal cities and focal points in the Midwest and Western United States show the highest rates of multi-family development. There are a few exceptions in Florida, Texas, and Georgia, but generally, cities in the South report the lowest rates of new multi-family housing. This is likely attributed to lower demand and lower home prices compared to other regions of the country.
More on the report: https://constructioncoverage.
