The U.S. has a nationwide shortage of single-family homes measured by industry economists in the millions of units. Assessing the severity of supply gaps in local markets relative to local housing demand can prove challenging.

Job creation is one proxy for a particular zip code’s housing needs, given correlations between job gains, household formation and economic development. Comparing labor gains to new construction permitting data can help illustrate whether an area’s housing needs are being met, said the National Association of Home Builders (NAHB) in new research published Monday.

Roughly 1.8 million net new jobs were created in 2024 compared to 2023, according to an NAHB analysis of the most recent government data. Housing permits issued in 2023 totaled 1.51 million, including single-family and multifamily permits, producing a jobs-to-permits ratio of 1.2.

In other words, the U.S. economy added 1.2 new jobs for every housing permit issued, a figure that is slightly below the “balanced” ratio that NAHB looks for between 1.25 and 1.5. NAHB used 2023 permitting data to reflect the lag between permits being issued and newly built housing units reaching the market.

For example, in Fairbanks, Alaska; Morgantown, W.Va.; and Battle Creek, Mich., the jobs-to-permits ratios were 18.2, 15.7 and 8.3, respectively. Those scores signal markets where residential construction “has not kept pace with employment growth,” according to the analysis.

“High ratios indicate job-heavy areas with a housing deficit and lower ratios suggest that there are more housing units available than new jobs added,” said Danushka Nanayakkara-Skillington, assistant vice president for forecasting and analysis at NAHB and author of the report. “Overall, lower ratios suggest less acute housing supply pressures.”

The jobs-to-permits ratio is “highly dependent on sub-regions” and whether typical earnings from newly created jobs align with the affordability of new houses being built. But the high and low ends of the ratio distribution paint clear pictures of local markets.

On the single-family side, a jobs-to-permits ratio of 1.84 in 2024 exceeded the all-permit ratio of 1.2. The higher figure points to “ongoing supply constraints” in owner-occupied markets, NAHB reported, where numerous pressures are impinging on new-home production, from elevated mortgage rates and labor shortages to limited lot availability.

Hagerstown, located in Maryland, Fairbanks and New Haven, Conn., had the highest jobs-to-single-family permits ratio according to the builder trade group, at 38.3, 29.7 and 15.7. The New York City metro area, Montana’s capital city of Helena and Flagstaff, Ariz., followed at 13.6, 13.4 and 12.2.

The Iran war has caused inflation to surge, leaving builders to anticipate continued affordability pressures in the months ahead. Single-family housing starts were 6.7% lower than a year ago in May, while single-family permits were 1.8% lower over the year.

While permitting may appear steady in low-ratio areas, those zip codes may suffer from development challenges linked to declining labor gains, including shrinking tax bases, slower population growth, less labor force participation and the loss of regional employers.

“As a result, even modest levels of residential permitting can produce comparatively low ratios when job creation is limited,” explained Nanayakkara-Skillington.

Slow new-home sales in 2024 and 2025 have suppressed broader residential construction activity. Home builders have watched their backlogs of completed inventory swell while facing margin pressures from financing and input costs that remain high.

The results from the NAHB’s report underscore important distinctions between owner-occupied and rental housing markets, with single-family operators facing more persistent supply constraints and multifamily development helping to absorb demand.

“While the national jobs-to-permits ratio has moved closer to historical norms, significant imbalances remain across metropolitan areas, particularly in markets where strong employment gains continue to outpace new housing construction,” concluded Nanayakkara-Skillington.