Boston Fed: New England's Housing Crisis as Migration Booms and Construction Lags
Remote work and migration patterns pushed home prices up 50% while building permits struggle to keep pace
Housing prices in New England have jumped roughly 50% since the start of 2020, putting severe pressure on affordability throughout the region. In "New England's Housing Markets: Supply and Demand Factors Affecting Housing Prices across the Region," a February 2025 report by Sam Shampine of the New England Public Policy Center at the Federal Reserve Bank of Boston, data shows that while building permits are increasing, demand continues to outstrip supply by a wide margin. This report aims to improve understanding of housing affordability by exploring supply and demand factors influencing prices region-wide.
By the numbers
50%: The increase in single-family home prices in New England from Q1 2020 to Q1 2024
8.2%: Growth in building permits issued from 2021-2023 compared to 2017-2019
0.55%: New building permits as a percentage of existing housing stock in New England (2021-2023), compared to 1.16% nationally
31%: Percentage of New England homes built before 1950, compared to 16.4% nationally
0.19%: Average annual post-pandemic population growth in New England versus 0.34% nationally
The big picture
The Federal Reserve Bank of Boston report reveals how migration patterns have reshaped housing markets across New England since the pandemic, with lower-density areas seeing the strongest population growth and highest price increases. When tracing the association between supply and demand factors and housing price changes, prices have risen fastest in places where migration increases have been largest.
Between the lines
Migration trends have shifted dramatically. Areas with lower population density have attracted more residents after the pandemic began - Vermont, for instance, reversed decades of out-migration to see a net inflow of new residents.
In 2021, deaths outnumbered births in New England, so any population gains were driven by in-migration from other parts of the country or world.
After the pandemic began, Connecticut attracted approximately 50,000 New York City residents, who likely took advantage of remote work opportunities.
Zoom in
Housing demand has outstripped supply in New England both during the decade preceding the pandemic and since. The data shows a clear relationship: Prices have risen fastest in areas with the highest migration rates, while prices have increased more slowly in areas with more robust building permit activity relative to population.
The correlation between net migration rates and home price changes is higher in New England than nationally, and the two move more closely together in the region.
Rental vacancy rates have been falling over time, and this trend has intensified in recent years for many of the region's metropolitan areas.
State differences
Connecticut: Permitting was volatile throughout the 2010s. It fell in 2020 and 2021 before rebounding in 2022 and 2023, surpassing 2019 levels. The state saw a large number of people move in after the pandemic, shifting from negative to positive net migration.
Maine: Steadily increased permitting since 2010, with only slight dips before rebounding. It was one of only two states in the region to increase permitting each year from 2019-2022, though permitting dipped below 2021 levels in 2023. Net migration into Maine gained momentum after the pandemic began.
Massachusetts: Nearly matched the national pace of permitting from 2010-2015 but has increasingly lagged the national average since then. Permitting jumped in 2021 then fell in the following two years. Had rapid population growth before the pandemic, but growth collapsed after 2020, with 9,792 more residents leaving than entering in 2021.
New Hampshire: Saw overall permitting increases during the 2010s with moderate peaks and valleys. Permitting jumped in 2021 then fell in the following two years. Net migration gained momentum after the pandemic began.
Rhode Island: Experienced overall permitting increases during the 2010s with moderate variations. Permitting was relatively flat from 2020-2022 but dipped in 2023. Net migration has fluctuated between negative and positive, with strong gains in 2023 compared to previous years.
Vermont: Had permitting increases during the 2010s with moderate variations. It was one of only two states in the region to increase permitting each year from 2019-2022, and continued the upward trend in 2023. The state reversed a decades-long trend of outmigration after the pandemic began.
What they're doing
New England states have implemented various housing initiatives:
Maine: $20 million for affordable housing development and $18 million for rental relief
Massachusetts: Financial assistance for 1,900+ housing units, $19.2 million in affordable housing financing for Cape Cod
Vermont: $2.6 million in downpayment assistance and $445,000 for accessibility modifications
Connecticut: $42.4 million to build and renovate public housing, $26.3 million to remediate contaminated land
New Hampshire: $30 million from HUD for housing affordability and community development
Rhode Island: Five bills signed to increase housing development state-wide
The bottom line
The construction of new housing units in New England has not kept pace with demand, even as permitting has (slightly) increased in recent years. Regions with higher net migration see stronger price growth, while areas with more building permits relative to population see smaller price increases. Despite policy initiatives across all six states, substantial improvements in affordability remain hard-fought.
Thanks for posting this.
Here in VT at least there is a paradox. There is local and statewide zoning reform, there is building, including new homes in higher-density growth centers, and yet, consistent with this report, its not enough to provide sufficient housing or bring down the cost of housing.
Some of it is about infrastructure, but the only bigger picture answer I can see is that its all about rentier capitalism. The land supply is limited by infrastructure availability and the numerous natural constraints of New England landscapes. Until we tax away the speculative gain on what is suitable for development, we'll never know what other roots this crisis has.