Low mortgage rates, job growth, and an improving consumer optimism have all supported the recovery in home sales during the last few years. Both sales of newly built as well as previously owned homes are up, with the growth stronger for new homes. Since the trough in new-home sales in 2011, sales had jumped more than 50 percent by 2016 (Figure 1).
The recovery in new-home sales has not been uniform across the nation, just like the economic recovery has not been even. For example, metropolitan areas that are relatively affordable and have a large population and strong job growth have generally accounted for the largest number of new-home sales. Comparing the 100 metros with the largest number of new-home sales in 2016, Houston, Dallas, Atlanta and Phoenix top the list, each averaging more than 1,000 new-home sales per month (Figure 2). These four metro areas are in our nation’s top 12 in terms of population, have had good job growth in recent years, and are relatively affordable compared with other large metros.
Because it’s not surprising that large urban areas have relatively high new-home sales, it’s helpful to compare metros based on the new-home market’s share of total sales. Our analysis of CoreLogic’s public records data uncovered that, nationally, new homes accounted for 9 percent of all sales during the year ending September 2016. The new-home share was much higher in some metro areas, however. In Raleigh, Austin, Charleston and San Antonio, for example, the new-home share was about one-in-five sales (Figure 3). These metros have had strong local economies and a relatively low cost of living that has attracted households from other markets and spurred home building.
There is one additional factor that the top new-home markets have in common: They are located in warm climates or near our Western mountains, highlighting the secular migration of the American population from the Northeast and Midwest. And this migration is expected to continue in the coming decade, with new construction and home sales continuing to be concentrated in the South and West.
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