I live in North Carolina near the coast. Since 2015, our county government has approved 50,000+ new homes, with many of those having been built or under construction. And that’s just in county jurisdiction. The local towns and cities have probably approved another 30,000 in that timeframe. (These aren’t made up numbers, they come from the local governments.) Current population is about 170,000 in the whole county.
I hear folks say you have to build homes to bring home prices down, and in theory that makes sense – I mean, it’s supply and demand. However, in my region and in my state in general, I’m noticing housing prices are not dropping as inventory rises. In fact, the opposite is happening.
According to the local association of realtors, the July 2024 median sales price was $357,000; the July 2025 median sales price is $389,500. The average July 2024 sales price was $445,709; the July 2025 average price was $521,568. For reference, more than 700 new listing were added both in July 24 and July 25.
Why is this happening?
My county is building homes like crazy. Median prices rose from 2024 to 2025. Why?
byu/Lonely_Affect991 inAskEconomics
Posted by Lonely_Affect991
2 Comments
Yeah. You’re going to have to provide some links and name your county.
pop of 170,000 means something like 60,000-80,000 housing units in itself.
If you are even close to correct/accurate on the number of homes built in the last 10 years, we are talking some county on the outlying edge of some very large very fast growing metro that has added its entire population in the last 10 years.
As it happens Brunswick County NC is the fastest growing NC coastal county and is adding more on the pace of 20,000 people every 5 years.
https://www.axios.com/2025/01/05/fastest-growing-us-counties-population
But also what happened 10 years ago doesn’t really tell us much about what happened last year.
The houses are likely being built *because* the price is rising, *because* demand is increasing.
Economists have an expression, “Never reason from a price change.” From prices alone, you cannot infer anything. This is because a rise in price could be due to either a fall in supply *or* a rise in demand.
You have to look at the change in quantity too. If price is rising while quantity is rising, then you have a demand increase. But if price is rising while quantity is falling, you have a supply decrease.
The relevant quantity here is total home sales (which reflects an equilibrium of supply and demand), not home construction (since that’s quantity supplied, but not necessarily the equilibrium market-clearing quantity).
Still, from what you’ve told us, the most likely explanation is that price and quantity are both rising together, which suggests demand is increasing.
Thus, as the demand curve is shifting right, you are sliding *along* the supply curve. As demand increases, so does the price. Then, the higher price is encouraging additional home construction *along* the supply curve. Thus, the new construction is a response to the higher price, so it won’t bring the price down (at least, not in the short-run; in the long-run, the supply curve gets flatter, so the price will fall down somewhat, at least partway, but probably not all the way back down to where it originally was).
In other words: start with a supply and demand graph, and shift demand rightward. You’ll see P and Q both increase as demand moves *along* supply. In the longer-run, the supply curve gets somewhat flatter, so Q rises even more, while P falls somewhat, but P probably won’t fall all the way back down to where it originally was.
The YIMBY argument is that *shifts* in the supply curve will reduce the price. This requires reducing regulation so that the cost of construction falls, increasing the supply curve, and reducing the price. That’s distinct from a movement *along* the supply curve in response to a *shift* in *demand*.
This is why Econ 101 lays such a huge emphasis on distinguishing shifts of a curve from movements along the curve.
Still, we can say that the price is increasing by less than if the new housing hadn’t been approved at all. Imagine if demand were increasing, but the government denied all the permits. Then the price would rise even more than what you’re saying. So we can still say that compared to a quasi-quota system, where the government restricts new construction (causing the price to rise), a freer market in which permits are approved, will cause the price to rise less. To see this, draw a graph with the quantity restricted by the quota; the resulting graph will look identical to a price-floor graph, in which the price is held artificially high (above market-clearing). But as long as demand is increasing, the price will inevitably increase, regardless of how many permits are approved or denied. The only question is whether the price will increase by a lot or only by a little. (Unless housing is a literal constant-cost industry with a perfectly elastic supply curve, but that’s unlikely, especially in the short-run.)