July 27, 2026
Permitting data is often treated as a leading indicator of housing supply. Below, we examine permitting activity in Washington and evaluate trends in construction starts across the state.
In 2023, Washington economists estimated that the state needs to build 1 million new homes over the next twenty years. This translates into a target of 50,000 new homes built annually over the next 20 years to keep pace with demand. State leaders have warned that failing to meet these targets would worsen the already persistent housing affordability crisis. Currently, only 25% of Washington households can afford the median-priced home of $600,00. Without meaningful increases in construction, the affordability crisis will continue to further constrain household formation, reduce consumer spending, limit economic mobility and slow job creation.
Figure 1 shows that overall permits generally recovered and began to reach levels comparable to those prior to the 2008 financial crisis, reaching a highwater mark in 2021 with 56,000 units permitted. However, in the years following 2021 we see a steady decline, with permitted units falling well below the state's goal of 50,000 new housing units annually. Industry participants have pointed to rising construction costs following implementation of the 2018 Energy Code in February 2021. The 2018 Energy Code imposed stricter efficiency requirements and became a significant contributing factor to reduced project feasibility, particularly for entry-level housing in subsequent years.
Upon further analysis, we also see permits per capita declining since Washington State passed the Growth Management Act in 1990 (Figure 2). Aside from 2021, spurred by the historically low pandemic-era interest rates, the state has failed to reach its per capita housing production levels prior to the financial crisis.
Taken together, these trends suggest that Washington’s housing production is not keeping pace with long-term demand, particularly as population-adjusted outputs near multi-decade lows. As a benchmark for state leaders, we’ve developed the Housing Deficit Clock, a live tracker showing how far housing production is falling behind the pace required to build the state’s goal of 1 million new homes between 2024 and 2044.
