Coronavirus Likely to Add Momentum to Increased Home Building in Smaller Markets

Disaster Response
Published

The COVID-19 pandemic is likely to hasten a housing trend already taking place across the nation – residential construction activity that is expanding at a more rapid rate in lower density markets such as smaller cities and rural areas. Multifamily development is also proceeding at a brisk pace in areas where education and health services dominate. These are among the findings of the latest quarterly NAHB Home Building Geography Index (HBGI).

“We expect the virus could affect future housing preferences for those currently living in the hardest-hit, high density environments like central cities and that housing demand will continue to increase in medium- and low-density communities,” said NAHB Chairman Dean Mon.

“The first quarter HBGI data reveals that construction growth expanded over the last year more quickly in low population density areas than high density regions,” said NAHB Chief Economist Robert Dietz. “This trend will continue as households seek out single-family homes further from urban cores, particularly as telecommuting continues in greater numbers.”

An unavoidable lesson of the public health crisis associated with COVID-19 is that major metropolitan areas faced greater challenges. High density lifestyles, championed by some urban planners over the last decade as a rival to suburban living, proved to be vulnerable to a virus due to crowded living conditions, dependency on mass transit, and insufficient health and public sector infrastructure.

The HBGI found that even before the pandemic hit, home construction activity was increasing at a higher rate in inner and outer suburbs than in high-density markets. First quarter HBGI findings show:

  • Single-family construction expanded across all seven economic geographies, posting the strongest growth (9.1%) in outlying suburbs (exurbs) of small metro areas, as measured on a one-year moving average.
  • Over the past year, apartment construction growth in less dense markets has outpaced expansion in larger metropolitan areas.
  • All economic geographies reported net growth over the past year for single-family and multifamily construction, a reminder of the momentum home building possessed before the current recession.

The 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 urban and rural regions.

The first quarter HBGI also features a new economic geography class based on local employment in the education and health services sector (EHS). Given the public health crisis associated with COVID-19, this sector is of critical importance. The HBGI designates EHS-focused regional markets as the top quartile of counties based on this employment share (25.7% or above of total employment). These counties also make up 23.2% of the U.S. population.

This analysis finds:

  • 4% of single-family construction occurs in EHS markets;
  • 4% of multifamily construction occurs in these markets;
  • Multifamily construction has outpaced single-family construction in these markets over the past year;
  • Multifamily construction has expanded at nearly twice the growth rate of the rest of the construction in EHS markets over the past year; and
  • Single-family construction was growing in EHS markets, but the rate was slower than the rest of the nation.

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

House Prices

Jun 13, 2025

Which Markets Have Seen the Greatest House Price Appreciation Since the Pandemic?

House price growth slowed in the first quarter of 2025, partly due to a decline in demand and an increase in supply. But since the onset of the COVID-19 pandemic, house prices have surged nationally. See which markets saw the greatest - and the least - house price appreciation since the pandemic.

Professional Women in Building Council | Workforce Development

Jun 12, 2025

How PWB Members are Bridging the Skilled Labor Gap in Construction

NAHB's Professional Women in Building (PWB) Council has announced a new workforce development partnership with SkillsUSA, a national education nonprofit.

View all

Latest Economic News

Economics

Jun 13, 2025

Household Real Estate Asset Value Falls to Start the Year

The market value of household real estate assets fell from $48.1 trillion to $47.9 trillion in the first quarter of 2025, according to the most recent release of U.S. Federal Reserve Z.1 Financial Accounts. The value of household real estate assets declined for three consecutive quarters after peaking at $48.8 trillion in the second quarter of 2024 but remains 2.1% higher over the year.

Economics

Jun 12, 2025

Producer Prices Rise in May: New Construction Input Analysis

Prices for inputs to new residential construction—excluding capital investment, labor, and imports—rose 0.2% in May, following a (revised) decrease of 0.2% in April. These figures are taken from the most recent Producer Price Index (PPI) report published by U.S. Bureau of Labor Statistics.

Economics

Jun 11, 2025

Inflation Up Slightly in May

Despite inflationary pressure from tariffs, inflation in May rose slightly but came in softer than expected. The Consumer Price Index increased from 2.3% in April to 2.4% in May year-over-year, according to the Bureau of Labor Statistics’ report.