The national housing supply gap is approaching 4 million homes, and affordability challenges are becoming more severe. As a result, builders and real estate professionals must intensify their efforts. However, not all states provide equal support for builders.
new report evaluates all 50 states, along with Washington, D.C., on their handling of housing affordability and construction levels.
This data is not just for policymakers—it also serves as a clear warning for builders, developers, and real estate agents about which areas present opportunities and which maintain significant development obstacles.
Understanding the Grades: Affordability + Supply
The assessment system assigned letter grades to each state based on two weighted categories:
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Homebuilding Score: Evaluates the rate of permitted new construction relative to current market needs and assesses new-home price competitiveness.
The South and Midwest Lead the Class
States such as Texas, Iowa, South Carolina, and Georgia scored high because they implemented:
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Lower home price-to-income ratios
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High construction permit activity
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Less restrictive zoning in many areas
These conditions create strong opportunities for builders and provide buyers with more affordable housing options.
The Northeast and West Are Falling Behind
Seven states—including California, Massachusetts, New York, Hawaii, Oregon, Connecticut, and Rhode Island—received failing grades. These states face:
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Severe affordability issues
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Low new construction volume
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Onerous regulations that make building difficult
According to Realtor.com senior economist Joel Berner, “States that perform poorly in grading face an increased risk of worsening their affordability problems unless they start building new homes.”
Builders Speak Out: “Let Us Build”
Builders in low-scoring states are raising concerns. For example, the California Building Industry Association (CBIA) is actively pushing for reforms to simplify environmental review processes and reduce permitting delays.
In New York, developers face additional restrictions due to new wetland protection measures that extend into suburban areas. The New York State Builders Association (NYSBA) warns that these rules now prohibit development on large tracts of build-ready land.
“The building regulations have become so complicated that many builders are moving operations to North Carolina, South Carolina, and Virginia, where regulations are more favorable,” said Michael Fazio of the NYSBA.
What This Means for Builders and Developers
The report serves as valuable market intelligence beyond its grading function.
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High-rated states (A or B): Offer strong growth potential and better conditions for development.
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Low-rated states (F): Indicate market demand but pose higher risks due to project delays, added costs, and community resistance.
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Policy engagement is crucial: Changes in California and New York highlight how local policies can either expand or restrict housing development opportunities.
Explore the Full Interactive Map
You can view your state’s grade and supporting data through interactive tool.
The Bottom Line
Real estate investors, builders, and developers must closely monitor state policies, as they directly influence housing opportunities and challenges.
In areas with supportive regulations, building activity fosters affordable housing solutions. In states with restrictive frameworks, progress will remain slow until reforms are made.
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