Wet weather, trade war, labor shortage combine to hold back Tri-Cities new home construction

A new home being built with wood, trusses, supports and a foundation.

(Parts of this report were updated with the Bureau of Labor Statistics revised reports for the Johnson City MSA nonfarm jobs totals)

The Tri-Cities new home construction sector slogged through some of the wettest weather on record during the fourth quarter of 2018, a softwood shortage during a trade spat with Canada, increasing material costs and a labor shortage with a 5 percent decline from 2017. At the beginning of the year, everything was pointing toward a 7% increase in new home permits.

The biggest fall-off came in Washington County, which still managed to dominate the market in seven-county NE Tenn. region. Builders pulled 76 fewer permits – a 16.3% decline – than they did in the previous year. Not all of the slack can be blamed on the trade war, weather, and labor. The Johnson City Metropolitan Statistical Area (MSA) has a rough year in the labor market. It was the only MSA in the state showing job declines during the first half of the year. It recouped in the last half of the year. Revised Bureau of Labor Statistics reports substantially upgraded the MSA’s nonfarm job total from the earlier preliminary numbers.

The effects of the MSA’s labor market performance can also be seen in Carter County’s new permit performance. Washington, Carter, and Unicoi comprise the MSA. New permits were down 11.9%, according to The Market Edge’s Q4 and year-end new permit report. No data was available for Unicoi County, but the new home sector there did see quite a bit of activity from residents relocating to that area. Much of the migration was coming from the Asheville area.

Greene County was last year’s new residential permit rockstar. Permits were up 34.2% and totaled 113 by year’s end

Sullivan County, the region’s second largest new home market, finished the year with a 2.2% decline and 215 permits.

Hawkins and Washington County VA showed small gains. Hawkins finished the year with 27 new home permits, an 8% increase while Washington County had 59 new permits for an 11.1% gain.

There were 1,017 new permits in the region compared to 1,073 at the end of 2017.

Builders are optimistic about this year’s market. The continue seeing high demand in a market that is experiencing some of the lowest inventory levels real estate professional can remember. Those tight conditions exist in both the existing and new home market.


High-end home permits also tumbled last year. At the end of the year, there were 71 permits for the home that were 4,000 square feet or more or had a construction value of $400,000 or more. The year’s total was down 20.2% from 2017.

Washington County TN continued to enjoy its dominance in the high-end market with 25 new additions, down from 36 the previous year.

Washington County VA had 17 new permits, down from 22, while Sullivan County had 15 new permits, down from 19 in 2017.

The biggest gain came in Greene County with 10 new high-end home permits up from five the year before.



1 reply

  1. Very interesting post. Thank you for the facts shared.