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ArlingtonReal EstateOuter suburbs see more home construction, cities less

Outer suburbs see more home construction, cities less

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Residential construction continued to shift toward the suburbs and lower-cost markets, and this trend is especially pronounced within the multi-family sector, according to the latest Home Building Geography Index (HBGI) released by the National Association of Home Builders (NAHB).

During the second quarter of 2021, multi-family construction posted double-digit percentage gains in small metro core and suburban areas, while large metro areas experienced a decrease for multi-family building activity.

“The trend of construction shifting from high-density metro areas to more affordable regions, which accelerated at the beginning of the pandemic early last year, appears to be continuing,” said NAHB chairman Chuck Fowke, a custom builder from Tampa.

“Lower land and labor costs, and lower regulatory burdens in suburban and exurban markets make it more appealing to build in these communities. And workers are increasingly flocking to these areas due to expanded teleworking practices and lower housing costs,” Fowke said.


The HBGI showed that multi-family residential construction grew by 14.3 percent in small-metro urban cores and 25.5 percent in small-metro suburban areas in the second quarter. In contrast, large-metro core areas recorded a 0.5 percent decline.

“There was a marked increase in new apartment construction outside large metro areas,” said NAHB chief economist Robert Dietz. “Similarly for the single-family sector, the HBGI data revealed that construction growth occurred more proportionally in these more affordable areas as well, while declining in terms of market share in the most expensive counties. However, overall single-family starts have slowed in recent months largely because of rising prices and limited availability of a broad range of key building materials.”

Single-family home-building has also experienced a shift toward more affordable markets, though not as pronounced as multifamily. Exurbs and outer suburbs of medium-sized cities accounted for 18.1 percent of single-family construction in the second quarter– market-share gain of 0.8 percentage points since the fourth quarter of 2019.

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