Fastest Home Building Activity Continues in Suburban, Exurban Communities

Trends
Published

Residential construction continued to shift toward the suburbs and lower-cost markets, and this trend is especially pronounced within the multifamily sector, according to the latest Home Building Geography Index (HBGI) released today by NAHB.

During the second quarter of 2021, multifamily construction posted double-digit percentage gains in small metro core and suburban areas, while large metro areas experienced a decrease for multifamily building activity.

“The trend of construction shifting from high-density metro areas to more affordable regions, which accelerated at the beginning of the pandemic early last year, appears to be continuing,” said NAHB Chairman Chuck Fowke. “Lower land and labor costs, and lower regulatory burdens in suburban and exurban markets make it more appealing to build in these communities. And workers are increasingly flocking to these areas due to expanded teleworking practices and lower housing costs.”

The HBGI shows that multifamily residential construction grew by 14.3% in small metro urban cores and 25.5% in small metro suburban areas in the second quarter. In contrast, large metro core areas recorded a 0.5% decline.

“There was a marked increase in new apartment construction outside large metro areas as people have greater flexibility to live and work in more affordable markets,” said NAHB Chief Economist Robert Dietz. “Similarly for the single-family sector, the HBGI data revealed that construction growth occurred more proportionally in these more affordable areas as well, while declining in terms of market share in the most expensive counties. However, overall single-family starts have slowed in recent months largely because of rising prices and limited availability of a broad range of key building materials.”

The second quarter HBGI also examined the correlation between construction activity and housing affordability. Findings show that since the beginning of the pandemic, growth rates in multifamily construction have been flat in the most expensive housing markets and stronger in more affordable areas. In the segment defined as the “most affordable” regions of the country, multifamily construction posted a 48.3% gain since the second quarter of 2020.

Single-family home building has also experienced a shift toward more affordable markets, though not as pronounced as multifamily. Exurbs and outer suburbs of medium-sized cities accounted for 18.1% of single-family construction in the second quarter – a market share gain of 0.8 percentage points since the fourth quarter of 2019. And while the bulk (45.8%) of single-family construction occurred in core areas of large and medium-sized metros, that share has declined 1.2 percentage points for that period.

Learn more about the HBGI on nahb.org.

Subscribe to NAHBNow

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

Log in to subscribe

Latest from NAHBNow

IBS

Sep 02, 2025

NAHB International Builders’ Show Registration Opens for Final Time in Orlando

The National Association of Home Builders (NAHB) officially opened online registration and housing today for the 2026 NAHB International Builders’ Show@reg; (IBS), the largest annual light construction trade show in the world.

Economics

Sep 02, 2025

Single-Family Construction Down in Large Metros, Up in Rural Areas

In a sign of a soft housing market, single-family construction posted declines in nearly every geographic region in the second quarter of 2025, with the largest percentage drop of 3.8% occurring in large metro, suburban counties where most permit activity occurs. And while multifamily output also fell in large metro core counties, most other markets posted multifamily growth in the second quarter, according to the latest NAHB Home Building Geography Index (HGBI) for the second quarter of 2025 released today.

View all

Latest Economic News

Economics

Aug 29, 2025

Multifamily Absorption Rises in the Second Quarter

The percentage of new apartment units that were absorbed within three months after completion rose in the second quarter, according to the Census Bureau’s latest release of the Survey of Market Absorption of New Multifamily Units (SOMA).

Economics

Aug 28, 2025

Mortgage Rates Move Lower, Hitting 10-Month Low

Average mortgage rates in August continued their steady decline and are now at their lowest rate since last November.

Economics

Aug 27, 2025

Wood-Framed Home Share Increased in 2024

Wood framing continues to dominate the U.S. single-family home construction market, according to NAHB analysis of 2024 Census Bureau data.