02/17/2012 07:12 pm ET Updated Apr 18, 2012

Local Construction Winners and Losers

Things keep looking up for the construction industry. New construction starts in January were 10 percent higher than one year ago. Confidence among builders jumped this month to the highest level in four years, even though it's way below where it was before and during the housing boom. And construction jobs are on the rise too, growing faster than the U.S. economy overall.

But housing markets are local. In some cities you hear the sweet sounds of hammers and backhoes, but others cities are silent. Building-permit data from the last quarter of 2011 -- the most recent available -- show where construction is hot and where it's not. Where it's hot, new homes will add to the existing inventory, giving buyers more choices. Where it's not, buyers will have to look at existing homes, and construction workers will have to hope for better news next quarter. Here are the winners and losers in new construction:


-- Houston had the most construction activity, period. More new building permits were pulled in the Houston metro area than anywhere else in the U.S.

-- Charleston SC, Austin, and Raleigh saw the most construction activity relative to their size. Although they don't have as much new activity as Houston, they're much smaller markets, so new construction in these cities will have a bigger impact on inventory and prices.

-- In San Jose and Boston, construction activity is back to normal levels (the 1990-2010 average). Very low vacancy rates and relatively stable prices are bringing builders back. San Jose, Boston, and other big Northeast and California metros tend to have much less new construction over time than metros in Texas and the South, which enjoy lower land prices and fewer regulations. Still, San Jose and Boston are the only metros back in the black: even Houston, with all its construction activity, is 20% below its own normal level.


-- Detroit and Milwaukee had the least new construction activity relative to their size. In the last quarter, the rate of new construction in those metros was less than one-tenth the rate in Charleston SC, Austin, or Raleigh.

-- In Miami, Las Vegas, and Atlanta, construction bumped along at less than one-fifth of normal levels. Some builders are breaking ground in those metros, but at nowhere near their usual pace. High vacancy rates and continued falling prices - and lots of foreclosures still to come to market -- scared away builders in these metros.