Georgia Is Investing the 14th Most in More Affordable Housing

Despite home price growth stabilizing, becoming a homeowner remains largely out of reach for many Americans. A recent Cato Institute housing affordability survey , conducted after the record-breaking rise in home prices during 2021 and early 2022, found that 87% of Americans are worried about housing costs. Additionally, 55% of homeowners indicated they couldn't afford to buy their current home at today's prices, and 69% are concerned that their children or grandchildren won't be able to afford a home in the future.

Multiple factors have contributed to the difficulty of buying a home, but most stem from low inventory caused by an underinvestment in building new affordable housing. According to the National Association of Realtors, decades of low levels of residential construction have created a national shortage of at least 5.5 million homes. During the COVID-19 pandemic, increased demand combined with record-low mortgage rates caused a surge in home-buying, further increasing competition for the few available homes on the market. Now, with average mortgage rates around 7%, many homeowners with previously secured low rates are reluctant to sell, resulting in even fewer homes being listed on the market.

Median Sale Prices

After a rapid rise during COVID, home sale prices have begun to stabilize

Source: Construction Coverage analysis of Redfin data | Image Credit: Construction Coverage

The shortage of available homes intensifies competition, driving up prices. Fortunately, after the rapid rise in home prices during the COVID-19 pandemic, the housing market has since cooled slightly. For context, between February 2020 and May 2022, the median home sale price surged from $303,000 to $415,000, a 37% increase in just over two years. Today, home prices are only about 40% higher than pre-pandemic levels, but with mortgage rates doubling, the monthly mortgage payment for a median-priced home has more than doubled since early 2020.

Total U.S. Construction Spending

Residential construction spending has contracted after nearing its pre-Great Recession peak in 2022

Source: Construction Coverage analysis of Census Bureau data | Image Credit: Construction Coverage

To make matters worse for prospective buyers, despite a federal initiative aimed at increasing housing availability, there has been a sharp reduction in residential construction spending that’s poised to make the problem of limited housing inventory even worse. The seasonally-adjusted annual rate of residential construction spending rose by over $700 billion (adjusted for inflation) from its low in February 2012 to its peak in May 2022. However, since then, it has decreased by nearly $150 billion, which means that less money is being allocated towards new housing inventory.

Average Value of New Construction by Location

Delaware had the lowest average construction value per new residential unit

Source: Construction Coverage analysis of Census Bureau data | Image Credit: Construction Coverage

While nationwide construction spending has declined, some states and cities are managing to build more affordable housing units. Delaware has the lowest average construction cost per new residential unit authorized at $143,579, followed by New Jersey and West Virginia at $157,141 and $189,464 per unit, respectively. These figures estimate the value of the physical structure, excluding land value. At the opposite end of the spectrum, Hawaii is building the most expensive new housing, at an astonishing $423,609 average per unit, or about 75% higher than the national average of $241,792. Other states with especially high new construction costs include Wyoming ($342,230) and Massachusetts ($334,280).

The list of major U.S. metropolitan areas building the most affordable new housing is diverse. Among the nation’s 55 largest metros with populations of one million or more, Richmond, VA reports the lowest average cost per new housing unit at $167,003, followed by Austin, TX ($176,303) and New York, NY ($177,044). Conversely, the San Francisco, CA metro has the highest average cost for new housing units at $327,619.

This analysis was conducted by Construction Coverage , a website that compares construction software and insurance, using data from the U.S. Census Bureau and Zillow. Researchers ranked locations by average construction value per new housing unit authorized in 2023.

Here is a summary of the data for Georgia:

Average value per new housing unit authorized: $230,662Total new housing units authorized: 63,621Total value of new housing units authorized: $14,674,938,000Median home price: $333,614Share of new units that are multi-family: 30.2%

For reference, here are the statistics for the entire United States:

Average value per new housing unit authorized: $241,792Total new housing units authorized: 1,511,102Total value of new housing units authorized: $365,373,043,000Median home price: $360,681Share of new units that are multi-family: 39.1%

For more information, a detailed methodology, and complete results, see U.S. Cities Investing in More Affordable Housing on Construction Coverage.