Home Building Geography Index (HBGI)

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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.

Key Findings in the Q4 2020 HBGI:

  • Outlying counties of smaller metro areas experienced a 20.7% growth rate in 2020.
  • Small metro core areas posted a 15.7% annual growth rate.
  • Large metro suburbs registered a 15.1% yearly gain.
  • Large metro core areas (close-in residential areas) posted the slowest gain, with just a 9.1% growth rate.

Download the data file of the full HBGI findings here.

Featured Category for Q4 2020: Higher Diversity Counties

Total population 218,006,356; 67.5% of total U.S. population

The Q4 2020 rollout of the HBGI, in addition to its usual, region-level classification of counties, highlights a new segmentation of the housing market based on counties with an ESRI 2018 Diversity Index Value of 46 and above. The Diversity Index, as constructed by ESRI, represents the likelihood (out of 100) that two persons, chosen at random from the same area, belong to different race or ethnic groups; a higher diversity county consists of a larger grouping of different racial and ethnic groups. U.S. Counties’ Index values roughly assumed a bimodal distribution and it was determined that the Index value of 46 was a suitable cutoff point for the values above and below, thus lending interpretation to “lower diversity” and “higher diversity” counties. We define lower Diversity Counties as having an ESRI Diversity Index of 45 or below and Higher Diversity Counties as having an ESRI 2018 Diversity Index of 46 or above. The 2018 Diversity Index’s value at the National level, that is, of the United States, stands at 64.

We observed the following in Higher Diversity counties:

  • 66.7% of single-family construction for 4Q20
  • ·-3.4% single-family quarterly growth rate for the 4Q20
  • 26.0% single-family year-over-year growth rate (4Q20 vs 4Q19)
  • 14.5% single-family 4-quarter MA of the year-over-year growth rate
Home Building Geography Index (HBGI)
  • 74.9% of multifamily construction for 4Q20
  • 3.6% multifamily quarterly growth rate for the 4Q20
  • 1.8% multifamily year-over year growth rate (4Q20 vs 4Q19)
  • 0.3% multifamily 4-quarter MA of the year-over-year growth rate

Starting with the first quarter of 2019, when the Home Building Geography Index was first unveiled, NAHB classified all counties in the U.S. as 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. These categories include:

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. This necessitated a reclassification of county-level regional assignments, 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. 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. 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.

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.