The rapidly growing resort and retirement centers along the Carolina coast continue to have the most intense housing development in the US. This is followed closely by the hurricane rebuilding region on the Gulf Coast, including Houston and the manufacturing and business centers in the North Carolina Piedmont area plus Austin Texas. No Florida metro areas remain in the list of the twenty five cities with the most intense housing development.

Residential construction starts activity was marginally higher during the first four months of 2008 than the low point last December but activity continues to decline in the most distressed markets and home prices continue to decline in most markets. Adding to homebuilders’ problems, construction materials costs are soaring due to developments overseas, consumer confidence has fallen to a recession level in the high 50s and mortgage rates remain near 6%.

Houston is by far the largest single family housing market. Atlanta, Dallas and Phoenix have fallen well behind. Houston largely escaped the rapid run up in home prices earlier in the decade because of its builder friendly zoning and permitting practices. Houston homeowners have relatively few problems now with adjustable mortgage rate resets and plunging home prices. New homes for New Orleans refugees and the booming energy industry are also contributing significantly to strong home demand.

Houston has also moved to #2 on the list of top multi-family markets. Multi-family permits have nearly doubled since 2005 in contrast to 50-70% declines in 2005’s hottest condo and apartment markets. New York City is still the top market although permits are declining with deeper cutbacks are expected soon following layoffs in the city’s financial markets. Permits are up from a year ago in many college and oil patch towns that escaped both the 2005-06 housing boom and the worst of the ongoing economic recession.

New Orleans, El Paso and Louisville are the only large metro areas with a growing housing market. This is due to hurricane rebuilding and a booming energy market in New Orleans, immigration and Mexican trade in El Paso and a diversified economy and low and stable home prices in Louisville.

Each of the smaller cities on the list has a unique source of job and income growth. Four are being boosted by hurricane rebuilding and most of the rest are college town with more stable jobs or oil towns with rising energy industry employment.

Atlanta leads the list of cities with the largest drop in housing permits from the peak in the housing boom two years ago. Excessive inventory is a bigger problem than declining home prices. Excepting Dallas and Houston, the other hard hit markets have experienced price declines that are causing a postponement in home purchases. Southwest Florida and Las Vegas/Phoenix will be the last markets to recover because the collapse of the local housing markets has led to significant local economic recessions.

For more information, please see US Metro Housing Markets – April 2008 – Cities 1-100.

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