The 10 Worst States for Home Construction and Affordability in 2026 – with New York Ranking Last

Coastal and Western states lag behind the rest of the country when it comes to homebuilding and housing affordability – with New York ranking dead last year.

The Empire State fared the worst of all 50 states and the District of Columbia, earning an F grade in the 2026 Realtor.com® Housing Report Card released Monday. It achieved a surprisingly low score of only 8.5 points out of 100 due to its slow construction and high costs.

Five other coastal states also received poor marks, with only slightly better housing and affordability scores: Massachusetts, Rhode Island, Hawaii, California and Connecticut.

Another four states – Oregon, Montana, New Jersey and New Hampshire – performed slightly better, receiving grades ranging from D- to D+.

The leader this year was Indiana, which scored 76.3 points out of 100. The Hoosier State’s impressive affordability helped it earn an A grade.

The report card ranks each state and DC on a 100-point scale based on two categories: housing affordability and housing development.

Affordability, which makes up 50% of the score, measures how accessible homeownership is for typical earners. It includes the REALTORS® Affordability Score and the portion of a state’s median household income needed to afford its average-priced home to calculate the financial burden on buyers.

The remaining half of the score is determined by housing activity, which assesses whether a state is producing enough new housing to meet demand. It is based on the permit/population ratio and the new construction premium – the price difference between purchasing a brand new home and an existing home.

Realtor.com senior economist Joel Berner says the states at the bottom of the rankings all share the same challenges, albeit with some local variations: restrictive zoning, a shortage of buildable land, and construction costs that far exceed the budgets of middle-income buyers.

Empire State is failing on construction and affordability

Since last year, New York has fallen from 49th to 51st place in the rankings. By 2026, a local middle-income household would have to spend more than 55% of that income to afford a $668,173 home, leaving them heavily cost-burdened.

On the construction side, New York’s permit-to-population ratio is a paltry 0.45. This means that building permits are less than half of what the state’s population share would suggest.

And in new homes Are When built, they are priced too high to meaningfully improve affordability: the typical new development in New York carries an eye-watering premium of nearly 74% over an existing home.

“One of the biggest challenges New York faces is the amount of time it takes to move a housing project from land acquisition to construction and occupancy,” Michael Faziodirector of the Association of New York State Builderstells Realtor.com. “The approval, environmental review, permitting and inspection processes can often take years before a project is completed and families can move into a home.”

Fazio explains that, taken together, these delays add significant costs to each project, which are ultimately passed on to homebuyers and renters, eroding the state’s affordability.

The red tape, coupled with NIMBY (“not in my backyard”) opposition to multifamily housing construction by local homeowners, has historically suppressed local housing production.

“Developers, builders and investors want to deploy their capital to create homes and strengthen communities across New York,” notes Fazio. “When projects are delayed for years due to regulatory hurdles, uncertainty or lengthy approval processes, it causes significant frustration and increased costs.”

What New York urgently needs, according to Fazio, is a regulatory environment that encourages investment and housing development rather than creating unnecessary hurdles.

Despite New York’s dismal performance on the report card, Fazio argues that the state, under the governor’s leadership, Kathy Hochulhas taken meaningful steps to address the housing shortage. Reforms to the State Environmental Quality Review Act took effect this year, aimed at streamlining environmental reviews and reducing delays in housing and infrastructure projects.

“Housing affordability cannot be solved without increasing supply, and that requires making it easier to build,” Fazio says.

New York is also making progress by taking advantage of recent court rulings that limit protection of the state’s wetlands, potentially freeing up land for housing development. In addition, the country promotes an energy strategy that balances environmental obligations with affordability.

Looking ahead, the head of the builders’ association says he is optimistic, saying stakeholders in government, industry and local communities are increasingly recognizing that housing affordability is “one of the defining issues of our time.”

“There is a growing realization that we simply need more housing, of every type and at every price,” Fazio said. “While challenges remain, recent policy reforms and the broader conversation around housing give me confidence that New York is moving in the right direction.”

Energy codes are blocking Bay State housing

Massachusetts, which hasn’t abandoned its No. 50 ranking from last year, faces some of the same challenges as New York — and an even slower pace of new construction.

Michael Travalinechairman of the Home Builders and Remodelers Association of Massachusetts’ The Government Affairs Committee says strict energy codes, high affordability requirements, restrictive zoning and numerous city approval processes are collectively responsible for the country’s poor record on new construction and affordability.

Travaline explains that there are currently three separate energy codes in Massachusetts, and the strictest of them all, the Specialized Opt-In code, imposes significant costs on all residential projects.

To incentivize developers and increase the pace of construction, Travaline argues that lawmakers should ensure that every municipality in the state follows the same code and exempts housing projects from the Specialized Opt-In requirements.

Other ideas include ensuring that cities and towns continue to implement zoning reforms to allow for more development, including through incentives such as additional financing and grants.

Travaline notes that there are reasons to be optimistic about the future of housing in Massachusetts, including recent legislative measures to boost construction such as the MBTA Communities Act and the Affordable Homes Act.

The MBTA legislation, which requires 177 municipalities with public transit to create zoning districts that allow multifamily housing, is expected to add more than 40,000 new housing units to the state’s housing supply, while the Affordable Homes Act, led by Gov. Maura Healeyaims to unlock 220,000 additional units.

“Key stakeholders in the housing industry and the political community understand that we are in the midst of a housing crisis and that we urgently need to find solutions that can make Massachusetts more affordable,” he said.

However, a rent control battle looms in the state as Travaline’s concerns could undermine housing production.

“Voters will decide in November whether to implement the nation’s strictest rent control policies,” Travaline said. “This would absolutely decimate housing production and have numerous negative impacts on the Massachusetts housing market.”

For struggling states, Berner says there is a path to progress on housing construction and affordability, but change won’t happen overnight.

“It is unlikely that one year of data will change these things in a meaningful way,” the economist concludes. “That doesn’t mean they can’t improve, but the gaps these states need to close will take several years of consistent improvement before they can register.”