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48 | M REPORT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Sun Belt Leads in Construction, But National Inventory Still Lags Nationwide housing supply is declining at a slower pace and sales of new homes are down, while the number of homes for sale remains near all-time lows and monthly mortgage payments are near record highs. A ccording to a report from Redfin, Sun Belt metros are leading the way when it comes to building new homes—with scores of buyers moving in from other parts of the country, causing inventory to dwindle and prices to surge. Austin had 31.1 single-family building permits per 10,000 people in the first quarter, the most per capita of any major U.S. metro. It's followed by Raleigh, North Carolina (30.7); Jacksonville, Florida (29.2); Nashville, Tennessee (26.6); and Charlotte, North Carolina (22.9). Five other Sun Belt metros round out the top 10: Phoenix (22.7); Houston (22.4); Orlando, Florida (20.3); Dallas (18.5); and Las Vegas (17.2). For multifamily properties, the top 10 list is split between Sun Belt metros and northern metros. Austin leads with 26.1 multifamily building permits per 10,000 people in Q1, followed by Jacksonville, Florida (19.9); Salt Lake City (16.7); Orlando, Florida (12.7); and Denver (12.6). Seattle (11.9); San Antonio, Texas (11.5); Richmond, Virginia (11.5); Minneapolis (11.1); and Charlotte, North Carolina (11) round out the top 10. Overall, 49 of the 53 U.S. metros with more that 1 million residents issued more single-family building permits per capita in the first quarter than they did on av- erage in the 10 years prior to the pandemic (2010-2019)—while some 38 of them issued more multifam- ily permits. Homebuyer demand has started cooling, housing supply is declin- ing at a slower pace than it was at the peak of the pandemic and sales of new homes are down. However, the number of homes for sale remains near all-time lows and monthly mortgage payments are near their record high, partly due to mortgage rates that have risen from roughly 3% to over 5% in recent months. Building more homes is one of the best ways to ease the affordability crisis. "If there had been enough homes at the start of the pan- demic, housing costs might not have skyrocketed the way they did over the past two years," Redfin Chief Economist Daryl Fairweather said. "The govern- ment should support homebuild- ing with things like subsidies and upzoning even as demand pulls back so the housing-supply hole starts to fill in. There still aren't enough homes to meet the pace of household creation, and we need to be more prepared when demand inevitably picks back up." Sun Belt home prices are skyrocketing and affordability is eroding quickly. The 10 metros with the most single-family build- ing permits per capita in the first quarter all saw sale prices shoot up more than the national level of 15.5% year over year in April. Prices in Las Vegas surged 29%, more than anywhere else in the country, while prices in Nashville, Orlando, Raleigh, and Phoenix were also among the 10 metros with the fastest-increasing prices (all growing at least 25%). While more new construction increases the total number of homes on the market, new homes are more expensive. The typical newly built home nationwide sold for $470,000 in the first quarter (up 19.2% year over year), while the typical existing home sold for $403,000 (up 16.7%). Another bar- rier for homebuyers is competi- tion from investors: Newly built homes made up more than 25% of houses bought by investors in Q 4, up from 3% two years earlier. The story is similar in the rental market, with outsized price growth in five of the top six metros with the most multifam- ily building permits per capita. Austin, Jacksonville, Orlando, Denver, and Seattle all saw ask- ing rents rise more than the 15% national increase in April, with Austin coming in No. 1 (+46% year over year). Rents have risen a great deal in those places partly because home prices have surged, leading to increased rental demand. On the other end of the spec- trum, Hartford, Connecticut, has 1.3 single-family building permits per 10,000 people, the fewest of the metros included in this analysis. It's followed by New York (1.9); Buffalo, New York (2.1); Chicago (2.3); and San Francisco (2.3). Next come Los Angeles (2.6); Boston (2.6); Providence, Rhode