A new Realtor.com housing report card shows that Southern and Midwestern states are outperforming the rest of the nation in addressing the housing affordability crisis, while states in the West and Northeast continue to fall behind.
Released on April 24, the rankings grade each U.S. state based on two key factors: housing affordability and homebuilding activity. Only one state—South Carolina—earned an A. All states that received A or B grades are located in the South or Midwest. Meanwhile, the seven states that received failing grades are all in the Northeast or West.
“Our state report card rankings reveal stark disparities in housing affordability and homebuilding efforts,” said Realtor.com Chief Economist Danielle Hale.
South Carolina leads in affordability-focused homebuilding
South Carolina stands out for producing new homes at lower prices than existing ones. On average, a new home in the state costs 8.2% less than an existing home—a reversal of the national trend. The Palmetto State also contributed 3.2% of all U.S. building permits in 2024, despite accounting for just 1.6% of the population.
This aggressive construction activity, focused on affordability, helped South Carolina clinch the report’s highest grade.
Texas and Iowa follow with strong, if contrasting, performances
Texas, which received an A-, is a powerhouse in raw construction numbers. It issued 15.3% of the nation’s residential permits last year while housing just 9.2% of the population. However, the average cost of a new home in Texas is still 7.5% higher than an existing home, suggesting affordability remains a challenge.
Iowa also received an A- for its unmatched affordability. The state’s median home costs just 4.03 times the median income—the lowest ratio nationwide. However, Iowa underperforms in building activity, and new homes there are 58% more expensive than older ones.
West, Northeast struggle under red tape
Seven states received failing grades: California, Hawaii, New York, Massachusetts, Rhode Island, Oregon, and Connecticut.
Among them, California was the worst performer in building permits relative to population. With 11.7% of the nation’s population, it only accounted for 6.8% of residential permits. Developers blame excessive regulations and zoning restrictions for the slow pace of construction.
“If California is serious about solving its housing crisis, we need a legal and regulatory system that supports—not stifles—homebuilding,” said Dan Dunmoyer, head of the California Building Industry Association.
In New York, new wetland protections have made it harder to build near suburbs. Statewide, permitting is slow, and local zoning rules create more obstacles for developers.
“Builders are leaving because it’s just so onerous,” said Michael Fazio of the New York State Builders Association. “They’re picking up and going to North Carolina, South Carolina, Virginia, where regulations aren’t as onerous.”
No state earns A+—crisis continues
Despite some bright spots, no state earned an A+, reinforcing that the housing crisis remains a national issue. The U.S. still faces a shortage of nearly 4 million homes, and even top-performing states have room to improve.
The Realtor.com rankings highlight a clear path forward: states that are aggressively permitting new homes and managing affordability can begin to solve the crisis. Those that continue to restrict development may see deeper housing shortages and rising prices in the years ahead.