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Tuesday, October 4, 2022
FairfaxHome-building continues to shift away from densely populated areas

Home-building continues to shift away from densely populated areas

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New findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) show a shift in home building activity over the past 30 months, with notable slowing in large, metro urban areas as a result of initial COVID migration effects followed by declines in housing affordability in high-cost and highly regulated markets as interest rates increased.

“The geography of home building has shifted over the last two and half years, with more single-family and multi-family construction occurring in lower density markets,” said NAHB chief economist Robert Dietz.

The HBGI is a quarterly measurement of building conditions across the country and uses county-level information about single- and multi-family permits to gauge housing-construction growth in various urban and rural geographies.

The index shows that the market share for single-family home building in large metro core and inner suburbs has fallen from 44.5 percent to 41.6 percent from the fourth quarter of 2019 (pre-COVID) to the second quarter of 2022.

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In contrast, single-family home building in outer suburbs in large and medium sized metros has expanded from 17.4 percent to 19 percent during the same period.

This decentralized trend holds true in the least densely populated regional markets. From the fourth quarter of 2019 to the second quarter of 2022, single-family home building market share in small metro core counties increased to 29 percent from 28.8 percent.

In rural areas, the home building share rose to 10.4 percent from 9.4 percent.

Meanwhile, the multi-family market showed a similar pattern over the same time frame.

The market share of multi-family construction in large metro core areas fell from 41.7 percent in the fourth quarter of 2019 to 39.3 percent in the second quarter of 2022.

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