An analysis of building permits and household changes in 74 of the largest metropolitan areas found that:
- From 1980 to 2000, the number of new building permits exceeded the number of new households by nearly 19 percent, although there were dramatic differences between decades. New housing permits outpaced household growth the greatest in the Northeast and Midwest, at 30 percent and 35 percent, respectively.
- When metropolitan building permits outpace household growth, it generally comes at the expense of the central city and possibly older, inner-ring suburbs. The size of a city’s share of metropolitan area building permits affects its change in households. All but one of the 27 cities that lost households in the 1990s had a small share (less than 10 percent) of their area’s building permits.
- If housing permits lag household growth in a metropolitan area, then the central city will not lose households and may actually gain them. In contrast, the more that new housing permits exceed household growth in a metropolitan area, the more likely the central city will lose households. But if the city’s share of the area’s permits is large enough, the city can escape household loss and can grow.
Overall, the relationship between housing construction and household growth is a fundamental and potent factor in the dynamics of urban change.