The Home Building Geography Index (HBGI) is a quarterly measurement of building conditions across the country and uses county-level information about single- and multifamily permits to gauge housing construction growth in various submarkets.
Within the HBGI, NAHB classifies all counties in the U.S. into one of seven regional categories based on population density and regional location. For each area, NAHB tracked single-family and multifamily growth rates (not seasonally adjusted) and market shares.
Key Findings for Q2 2020
- The increasing demand for construction in more suburban neighborhoods is being driven in large part by the coronavirus outbreak.
- Small metro suburbs accounted for the fastest growing geographical areas for single-family construction during the second quarter, up 10.6 percent on a four-quarter moving average basis.
- In the second quarter, single-family housing starts fell by 24 percent on a quarterly basis. Of the seven regional geographies, only small metro area suburbs posted a year-over-year gain in this quarter, while the others registered declines — the biggest of which occurred in large metro core areas.
- The market share for single-family construction in low-density areas (small metro core and suburbs, small towns and rural markets) increased from 47.5 percent a year ago to 48.4 percent.
- The fastest growing geographies for apartment construction in the second quarter were found in the exurbs, small metro suburbs and rural areas.
- The market share for multifamily construction in low density areas (exurban areas of large metro markets, small metro core and suburbs, small towns and rural markets) increased from 32.9 percent a year ago to 34 percent.
Update to County Populations
Beginning with the second quarter of 2020, NAHB updated the HBGI to use county population estimates from the 2018 5-year American Community Survey (ACS), as opposed to those from the 2016 5-year ACS used in prior rollouts. This necessitated a reclassification of county Regional assignments, as the Regional cut is based on population density-based delineations. The number of counties that changed their urban classifications in large metro areas was minimal. Most of the Regional reclassifications occurred to areas of lower population density. Of the 3,142 counties in the original HBGI, less than 140 counties changed Regional classification. Additionally, there were an additional twenty-three counties in Virginia and two counties in Hawaii that had not been classified previously and were combined with other counties per delineations provided by the Bureau of Economic Analysis, thus enabling further analysis of local homebuilding conditions. With the new Virginia and Hawaii county delineations, the total number of counties in the HBGI is 3,113.
These new population figures will be applied in forthcoming analyses until later years’ ACS population data become available and implemented, for which there will be announcement. Furthermore, there will be no retroactive changes to the earlier analyses that used 2016 ACS estimates.
The Home Building Geography Index is the successor to the Leading Market Index (LMI), whose tracking is no longer maintained. The LMI used single-family housing permits, employment, and home prices to measure proximity to a normal economic and housing market. It was calculated for 337 local markets, metropolitan statistical areas (MSAs), as well as the entire country. View an archive of LMI data with its original methodology.