Single-Family Large Metro Construction Lagged in 2019

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The latest release of NAHB's Home Building Geography Index (HBGI) shows single-family construction in large metro areas last year fell behind the growth of both exurbs outside medium-sized cities and small towns. Exurbs and small towns grew by 2.9% and 2.8%, respectively, while the growth in large metro areas fell 1.4% over the year. The gains in the exurbs and small towns are attributed to cheaper land and lower regulations that make development easier. In contrast, the higher cost markets of large metro areas suffered due to higher mortgage interest rates at the start of 2019. Together, large metro areas make up about 45% of the market share for single-family home building, with exurbs adding another 9%. The exurbs were the best performing regions in the large metro regions in 2019. In the multifamily sector, there was solid growth among all regions. Among the major hubs for apartment construction, small metro area core counties recorded the best performance in 2019 at 22.1% growth, with large metro core and large metro suburbs growing by 7.3% and 3.5%, respectively. Multifamily construction was supported by growth in demand for rental housing, particularly during the first half of the year when the homeownership rate declined. NAHB economist Litac Murali provides more analysis in this Eye on Housing post.

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