States in the South and Midwest are leading the country in housing affordability and construction efforts, according to a new national housing report card released by realtor.com.
South Carolina ranked first in the nation, earning the only A grade issued. All 13 states that received either an A or B were located in the South or Midwest.
Meanwhile, the seven states that received failing grades were found in the West and Northeast—regions generally associated with higher housing costs and stricter zoning and land-use regulations.
No state received an A+, suggesting that every region has room to improve in addressing the nation's housing supply gap, estimated at nearly 4 million units, realtor.com reported.
Why It Matters
The national housing shortage continues to pressure buyers, with affordability remaining a key issue. The report shows that policy, regulatory environment, and construction activity vary sharply between regions, directly impacting where Americans can find affordable housing.
What To Know
The report grades each state's response to the ongoing housing crisis based on two primary factors: affordability and new construction activity.
Affordability was measured on the share of median income required to purchase a median-priced home, while homebuilding activity was measured via building permits per capita and the price difference between new and existing homes.
South Carolina outperformed the rest of the country on several metrics. New homes in the state were priced 8.2 percent lower than existing homes—a reversal of the national trend where new homes are typically 3.4 percent more expensive.
South Carolina also accounted for 3.2 percent of national residential building permits despite having only 1.6 percent of the U.S. population.
The state's affordability ranking was moderate, at number 24 nationally, with the median home price of about 5.5 times the median annual salary.
Texas and Iowa received A- grades for different reasons. Texas earned its grade largely due to a surge in homebuilding. The state issued 15.3 percent of the nation's residential permits last year, while accounting for just 9.2 percent of the U.S. population.
However the state still faces challenges on affordability. The median new-construction home in Texas costs 7.5 percent more than an existing home, showing that efforts to build smaller, lower-cost homes are still needed.
Iowa excelled on affordability, with a median list price of $294,600, roughly 4.03 times the median local salary of $73,122—the best affordability ratio among all states.
However, Iowa lags slightly in issuing new building permits, and new homes there cost 58 percent more than existing ones, suggesting builders are catering more to higher-end buyers.
A total of seven states received the lowest grade on the new report card: Oregon, Connecticut, California, Hawaii, New York, Massachusetts, and Rhode Island.
Rhode Island ranked the lowest overall, which realtor.com reported could be due to a lack of available land to build on given the small size of the state. Although, the second-smallest state, Delaware, ranked above average with a C+.
What People Are Saying
Realtor.com Chief Economist Danielle Hale said: "Our state report card rankings reveal stark disparities in housing affordability and homebuilding efforts across the U.S. While some states are leading the way with strong homebuilding activity, others are grappling with high housing prices and sluggish construction."
President and CEO of the California Building Industry Association Dan Dunmoyer said: "If California is serious about solving its housing crisis, we need a legal and regulatory system that supports—not stifles—homebuilding. That means [environmental regulation] reform, streamlined permitting, and more flexible land-use policies."
Executive Director of the New York State Builders Association Michael Fazio said: "We need housing terribly. In this state, it's really at a crisis point, and everybody talks about it, but we need to be doing more to address it. Red tape and regulations are a major impediment—that's a major obstacle to building housing."
What Happens Next
California, New York, and other low-performing states may face increasing pressure to reform regulations that limit housing supply. Proposals such as streamlining permitting processes and revising environmental laws are gaining momentum among builders and policymakers. Without significant changes, affordability challenges in these regions are likely to worsen.
