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 Finding for Q3 2020
- Since the first quarter, the market share for single-family construction in urban core areas fell from 18% to 17.2%. Small metro core and suburb single-family market share increased from 37.7% to 38.2%.
- Apartment construction in large metro core and suburbs fell from 67.1% to 65.2%. Apartment construction in small metro core areas increased in market share from 21% in the first quarter to 22.4% in the third quarter.
- These broader trends have extended to traditional vacation home markets as well. Single-family construction in second-home markets (see Featured Category below) expanded at a 13.6% average rate over the last four quarters compared to a 10.5% pace for other counties.
- Apartment construction in second home markets was up as well — 11.1% compared to a 0.9% decline in other counties.
Featured Category: Second-Home Counties
Total population 17,327,501; 5.4% of total U.S. population
The Q3 2020 rollout of the HBGI, in addition to its usual, region-level classification of counties, features a segmentation of the housing market based on counties with a high concentration of houses that serve as additional residences. Defined as non-rental properties that are not classified as taxpayers’ principal residences, NAHB designates them as “second homes”, with ”high-concentration second-home counties” defined as having more than 15% of their housing units serving such a function.
- 9.9% of single-family construction for 3Q20
- 28.4% single-family quarterly growth rate for the 3Q20
- 23.2% single-family year-over-year growth rate (3Q20 vs 3Q19) 13.6% single-family 4-quarter MA of the year-over-year growth rate
- 5.2% of multifamily construction for 3Q20
- 6.3% multifamily quarterly growth rate for the 3Q20
- -16.9% multifamily year-over year growth rate (3Q20 vs 3Q19)
- 11.1% multifamily 4-quarter MA of the year-over-year growth rate
Regional Building Growth Conditions
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:
Update to County Populations
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.