A recent national housing report card released by the Realtor.com® economic research team has spotlighted the South and Midwest regions as leaders in homebuilding and housing affordability.
South Carolina emerged at the top of the rankings, becoming the only state to earn an A grade, signaling its effective response to the ongoing housing crisis.
The report card assigned a total of 13 A and B grades, all to states in the South or Midwest, showcasing their ability to confront housing challenges head-on.
Conversely, the seven states that received F grades are concentrated in the West and Northeast, areas known for higher housing prices and generally stricter zoning and land use regulations.
This report underscores significant disparities across the United States in terms of housing affordability and construction activity, according to Realtor.com Chief Economist Danielle Hale.
“While some states are leading the way with strong homebuilding activity, others are grappling with high housing prices and sluggish construction,” Hale noted.
The grading system utilized two primary factors: housing affordability and each state’s capacity to tackle future supply needs through new construction.
Affordability was assessed by looking at the Realtors® Affordability Score and the proportion of median income required for payments on a median-priced home, while homebuilding activity was evaluated through building permits per capita and the new-construction premium—the variance between new homes and existing homes’ costs.
In this regard, South Carolina exhibited exceptional performance, as the average new home in the state was priced 8.2% lower than existing homes. In contrast, the national median sales price of new homes was 3.4% higher than existing homes in the previous year.
This ability to construct homes that fall within affordable price ranges puts South Carolina ahead of many other states in the nation.
Furthermore, South Carolina accounted for 3.2% of all building permits issued last year, despite having only 1.6% of the United States’ population, showcasing a robust residential construction sector.
Although the state currently ranks 24th in affordability, with home prices approximately 5.5 times the median annual salary, its efforts in boosting construction are notable.
Other highly ranked states followed different paths to success. Texas, which received an A- grade, excelled in homebuilding initiatives.
Despite its homes being marginally less affordable than the national average related to local incomes, Texas has embarked on a substantial push for residential construction to satisfy future needs and ensure a stable housing supply.
The Lone Star State was responsible for 15.3% of all residential building permits in the previous year, overshadowing its 9.2% share of the U.S. population, indicating a significant gap in homebuilding activity.
However, new construction in Texas is also pricier, as the median cost of newly built homes is 7.5% higher than that of typical existing homes, pointing to a need for builders to focus on affordable housing solutions.
Meanwhile, Iowa achieved an A- grade due to its affordability, boasting the lowest price-to-income ratio in the nation despite falling short in the number of building permits? Iowa’s new homes, however, cost 58% more than existing homes.
The median list price in Iowa stands at $294,600, compared to a local median salary of $73,122.
Unfortunately, this suggests a focus on constructing larger, costlier homes may leave first-time buyers and lower income families without adequate options.
On the opposite end of the spectrum, seven states garnered the lowest grade of F: Oregon, Connecticut, California, Hawaii, New York, Massachusetts, and Rhode Island.
These states commonly face challenges with both high housing prices and insufficient construction activity to meet demand.
Rhode Island, ranking lowest numerically on the report card, may struggle due to limited land availability for new builds, while California’s notorious housing unaffordability crisis reflects poorly in its permits-to-population ratio.
Despite having 11.7% of the U.S. population, California only accounted for 6.8% of residential permits, largely blamed on strict regulations and land use constraints that inflate construction costs and deter new developments.
Dan Dunmoyer, president and CEO of the California Building Industry Association, emphasized the necessity for regulatory reforms, stating: “If California is serious about solving its housing crisis, we need a legal and regulatory system that supports—not stifles—homebuilding.”
He further advocated for adjustments to the California Environmental Quality Act, seeking a balance that encourages new projects rather than impeding them.
Similarly, New York officials are calling for regulatory reforms to mitigate hurdles in the construction sector. Michael Fazio, the executive director of the New York State Builders Association, expressed concern over the prevailing red tape and regulations as significant barriers to new housing developments.
He pointed out that recent environmental protection measures have further exacerbated the situation, potentially hindering growth in construction adjacent to urban areas.
“We need housing terribly. In this state, it’s really at a crisis point, and everybody talks about it, but we need to be doing more to address it,” Fazio stated.
As local zoning restrictions and lengthy permitting processes continue to plague builders in New York, many are leaving for states with less demanding frameworks.
Overall, the national housing report card paints a picture of unequal progress across the United States as states confront unique challenges in housing affordability and construction efforts.
While states like South Carolina, Texas, and Iowa are paving the way for improving homebuilding and affordability, others, particularly those in the West and Northeast, are entangled in a web of regulations and market pressures that could benefit from significant reforms.
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