A Suburban Shift for Home Building
Evidence of a suburban shift for consumer home buying preferences as a result of the COVID-19 pandemic can be found in the second quarter NAHB Home Building Geography Index (HBGI).
“The increasing demand for construction in more suburban neighborhoods is being driven in large part by the coronavirus outbreak,” said NAHB Chairman Chuck Fowke. “The growing trend for working at home is enabling more families to choose to live in lower cost, lower density communities. Moreover, persistent housing affordability challenges exacerbated by soaring lumber prices that have added $16,000 to the price of a single-family home since mid-April are adding to the need to find affordable housing in lower cost markets.”
“The county-level second quarter HBGI data shows relative growth in lower density markets that represent half of all single-family construction," said NAHB Chief Economist Robert Dietz. “We saw initial evidence of this trend in the first quarter, and in recent months these markets have registered faster growth for both single-family and multifamily building, as the demand for new construction shifted to more suburban and exurban communities.”
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. Small metro suburbs accounted for the fastest growing geographical areas for single-family construction during the second quarter, up 10.6% on a four-quarter moving average basis. This was followed by small towns (9.3%), small metro core areas (7.5%) and exurbs (5.6%). Other second quarter HBGI findings show:
- In the second quarter, single-family housing starts fell by 24% on 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% a year ago to 48.4%.
- 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% a year ago to 34%.
Latest from NAHBNow
Jul 11, 2025
Maine HBA Brings Real-World Training to State’s Future BuildersRecognizing an aging workforce and a critical need for new talent, the Association has partnered with the Sanford Regional Technical Center (SRTC) to prepare the next generation of skilled tradespeople. Through HBA-led instruction, high-school students are building homes from the ground up and gaining real-world experience.
Jul 10, 2025
What to Know About Expiring Energy Tax CreditsPresident Trump recently signed the One Big Beautiful Bill Act (OBBBA) into law, which significantly accelerates the termination date for federal energy tax incentives. Builders and remodelers using the credits should be aware of the new expiration dates and where necessary, consult with their tax professional for additional guidance.
Latest Economic News
Jul 11, 2025
Shrinking Lots: Spec Building New NormThe share of smaller lots remained record high in 2024, with two out of three new single-family detached homes sold occupying lots under 9,000 square feet (1/5 of an acre or less).
Jul 10, 2025
Remodeling Market Sentiment Dips in Second QuarterIn the second quarter of 2025, the NAHB/Westlake Royal Remodeling Market Index (RMI) posted a reading of 59, down four points compared to the previous quarter.
Jul 09, 2025
Mortgage Applications Picked Up in June as Rates EasedMortgage application activity picked up in June, supported by a slight decline in interest rates. The Mortgage Bankers Association’s (MBA) Market Composite Index, which tracks mortgage application volume, rose 5.4% from May on a seasonally adjusted basis. Compared to June 2024, total applications were up 21.1%.