Southern States Are Taking Over New Home Construction

While home builders are tackling supply shortages in southern states, coastal regions are seeing no sign of relief from a dire housing shortage that continues to drive up prices. Over half of all new construction starts are in the South, despite the fact that the coasts are home to the biggest population hubs and far more expensive housing, Insider reports.

According to Census data, the South accounted for the bulk of population growth throughout the last decade, and southern states also have more available lots on the market, making them prime locations for builders.

New construction is heavily skewed to the South, Bank of America Research said in a Monday note, citing data from the Census Bureau. Housing starts have rebounded through the year and now sit at an annual pace of 1.58 million homes. Yet 54% of starts are in the South, BofA said, leaving buyers on both coasts with little in the way of new supply. The South might be growing fastest, but the coasts are still home to the biggest population hubs and the most expensive housing.

Contractors are also focused on the buyers with the fattest pocketbooks. The share of new homes sold for more than $500,000 rose to 31% in September, BofA said. That category has seen sales boom through 2021 and recently overtook sales of homes priced below $300,000. Builders are only servicing that demand, but as millennials and baby boomers fight over a dwindling supply of starter homes, middle-income and first-time buyers are stuck with few options.