Micro Markets Lone Bright Spot for Single-Family Home Building in Fourth Quarter
In a sign of ongoing affordability challenges and a tepid housing market, single-family construction fell across all geographic regions in the second half of 2025, with the exception of low-density, low-populated micro counties. Conversely, multifamily construction posted gains across all geographic regions.
These are the major findings of the latest National Association of Home Builders (NAHB) Home Building Geography Index (HGBI) for the final two quarters of 2025 released today. This HGBI report was delayed because of last fall’s government shutdown and contains data for the third and fourth quarters of last year.
“The HBGI data highlight how affordability and space needs are driving home construction toward lower-density markets,” said NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. “Large metro core counties saw the steepest single-family decline while smaller and micropolitan areas with lower land and construction costs gained momentum.
“While single-family home building continues to face challenges across most of the nation, multifamily construction strengthened across every region in the fourth quarter following two years of uneven performance,” said NAHB Chief Economist Robert Dietz. “Growth returning to large metro core counties coupled with sustained construction in smaller markets signals a more balanced and geographically diverse multifamily sector heading into 2026 than in years prior.”
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 geographies.
The index registered declines for different-sized single-family markets in the fourth quarter, with the exception of micro counties, which posted a 1.6% gain, marking the seventh straight quarter of construction growth in these counties. Of particular note, large metro core counties, those with the highest population densities, reported declines of 12.8% in the final quarter of last year. This was the largest year-over-year four quarter moving average since 2023.
The HGBI geographic trends mirror the national trend in 2025, as single-family permits were down 7.4% from 2024.
The geographic composition of single-family construction continued to evolve over 2025, as large metro core counties lost 1.0 percentage point of market share between the fourth quarter of 2024 and final quarter of 2025. Small metro core counties, those with the highest population density in metro areas under 1 million in population, remained the largest market, adding 0.3 percentage points in market share from last year. The largest market share gain during 2025 was in micro counties, which were up 0.6 percentage points from 2024. This was driven by the growth in construction in these counties.
The fourth quarter HBGI shows the following market shares in single-family home building:
- 15.1% in large metro core counties
- 24.2% in large metro suburban counties
- 9.3% in large metro outlying counties
- 29.4% in small metro core counties
- 10.5% in small metro outlying areas
- 6.9% in micro counties
- 4.5% in non-metro/micro counties
Multifamily Construction Up Across the Board
Multifamily construction posted gains across all geographies in the fourth quarter, marking the first time all geographic sectors have shown quarterly growth since 2023. The highest levels of growth in the fourth quarter were in micro counties, up 14.0% on a year-over-year four quarter moving average. The lowest growth in the fourth quarter was found in the outlying counties of large metro areas, posting a gain of 1.9%.
Market share of multifamily construction shifted in the fourth quarter of 2025. The new status quo of higher levels of multifamily construction in smaller, less-densely populated areas remains. Compared to the fourth quarter of 2024, the largest increase in market share was in small metro core counties, with a gain of 0.6 percentage points over the year. Large metro outlying counties lost 0.5 percentage points during 2025, registering the largest decline in market share. All other geographies saw little change from last year.
The fourth quarter HBGI shows the following market shares in multifamily home building:
- 35.1% in large metro core counties
- 26.4% in large metro suburban counties
- 3.7% in large metro outlying counties
- 25.1% in small metro core counties
- 4.9% in small metro outlying areas
- 3.5% in micro counties
- 1.2% in non-metro/micro counties