As permits and housing starts decline nationwide, Arizona’s residential construction sector faces similar challenges. Permitting activity in the state has dropped for a second consecutive year, marking a -4.5% decrease compared to the previous year. This slowdown in Arizona housing permits hints at challenges for housing affordability and availability across the state.

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Zooming in further to see where permits fell the most, we found that:

  • Arizona issued 58,335 new permits last year, which represents a -4.5% year-over-year drop. Notably, permits for single-unit buildings decreased by -7.7%;
  • Tucson saw permits for new homes drop by -8.4%, mirroring a similar decline from 2022. New housing permits also decreased in Phoenix-Mesa-Chandler by -3.6% last year;
  • Prescott Valley stands out as the only small metro in the state to experience a decline in permits last year, with a decrease of -33%. On the other hand, other small metros witnessed increases: Flagstaff led the way with a 53.4% uptick in permit issuance, followed by Sierra Vista-Douglas with a 20.5% increase.

Nationally, the undersupply of new homes is made worse by the decrease in starts and permits. Last year, developers broke ground on 1,420,000 new homes, which is a 9% drop compared to 2022. Permits are following the same downward path: For the second year in a row, the number of authorizations for new homes is falling. What follows is an overview of permits and new construction data, as well as employment, income and business data at the national level, but also at state and metro level, including all 384 existing U.S. metros.

Here are a few highlights:

  • The total number of completed homes went up last year due to the 22% increase in multifamily units, which compensated for the 2% decrease in new single family homes.
  • In 2023, permits fell for the second year in a row: Last year’s 11% drop followed the 5% drop from 2021.
  • Like permits, total started units fell in 2023, by 9%. Similar to the negative trend in permitting activity, 2023 was the second year when builders broke ground on fewer homes compared to the previous year.
  • The South took the lead with the most permits issued (821,600), followed by states in the West (344,500), the Midwest (190,200) and the Northeast (114,300).
  • The top three states hoping to build the most in the near future are Texas, Florida and California, all boasting numbers of permits higher than 100,000 and even more than 200,000.
  • On the other hand, in 18 states, less than 10,000 permits were issued per state, with Alaska authorizing less than 1,000 new homes.
  • Of the 384 total U.S. metros, permits fell in 266 and increased or stagnated in 118.