Strong Employment Growth and a High Homeownership Rate in the Raleigh HMA
HUD’s Comprehensive Housing Market Analyses provide information on changes in local economies, housing markets, and populations and provide 3-year forecasts for demand in the area. This article is part of a series that sheds light on the content of these analyses.
The Raleigh, North Carolina Housing Market Area (Raleigh HMA) is in central North Carolina and includes Franklin, Johnston, and Wake counties. The city of Raleigh is in Wake County and is the capital city of North Carolina. The Raleigh HMA has an estimated population of 1.38 million. The Raleigh HMA is part of North Carolina’s Research Triangle, which is named after Research Triangle Park as well as the three major research universities in the surrounding area: Duke University in Durham, the University of North Carolina in Chapel Hill, and North Carolina State University in Raleigh. Research Triangle Park is the largest research park in the United States and home to many high-technology research and development firms.
A recent Comprehensive Housing Market Analysis on the Raleigh HMA highlights the economic and housing market activity in the area.
Economic Activity in Raleigh
During the 12 months ending in February 2019, nonfarm payrolls in the Raleigh HMA increased by 2.2 percent. The unemployment rate averaged 3.4 percent during this period, which was less than the national unemployment rate of 4.1 percent. Since 2000, the unemployment rate in the Raleigh HMA has been lower than the national average.
From 2012 to 2017, the Raleigh HMA economy grew at a faster pace than the national economy, with payrolls increasing by 3.2 percent annually for the HMA compared with 1.8 percent annually for the nation.
The professional and business services sector is the largest sector in the Raleigh HMA, accounting for 19 percent of the area workforce. Over the past year, employment increased by 2.9 percent, or 3,400 jobs, for a total of 119,200 jobs. Since 2010, about 50 percent of employment growth has occurred in this sector — specifically, in the science and technology industries. The Research Triangle, which includes the Raleigh HMA and adjacent HMAs, has the highest concentration of contract research organizations in the nation.
The education and health services sector is the fourth-largest sector in the HMA, and it has been the fastest-growing sector since 2001. Over the past year, employment in the sector grew by 2.9 percent for an increase of 2,200 jobs.
Over the next 3 years, payrolls in the Raleigh HMA are predicted to grow by an average of 2.5 percent per year. The report indicates that many local firms are expected to expand during the forecast period, contributing to the strong employment growth in the area.
Housing Market Activity in Raleigh
The Raleigh HMA home sales market is slightly tight, with an estimated vacancy rate of 1.2 percent. The rental market in the area is currently balanced, with an estimated vacancy rate of 5.5 percent, and the apartment market is also balanced, with a vacancy rate of 5.3 percent.
For the 12 months ending February 2019, the HMA’s homeownership rate is estimated at 66.3 percent, which is higher than the national homeownership rate of 64.2 percent. During the same period, existing home sales were down 2 percent from the preceding year while new home sales were up 6 percent, for a total of 33,775 new and existing homes sold.
During the 12 months ending in February 2019, 11,050 new homes were permitted for construction, a 6 percent decrease from the previous year. New home construction is concentrated in subdivision developments in Wake County outside of the city of Raleigh. The fastest-growing housing developments, however, are found in Johnson County, around the city of Clayton.
Housing Market Demand
Over the next 3 years, demand is expected for 28,300 new homes. Demand for rental units is estimated for 11,850 new market-rate units. For more detailed information on the Raleigh HMA, see the Comprehensive Housing Market Analysis on the area.