NAHB: Single-Family Market Share Continues to Shift Away from Densely Populated Areas

While nationwide single-family housing starts have slowed in the last year, the most significant reduction in percentage terms is occurring in the most crowded counties, where housing costs are highest.

Meanwhile, according to the latest data from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the fourth quarter of 2022, multifamily growth was healthy across much of the country at the end of 2022, with the notable exception in high-density cities.

“While the largest single-family market continues to be core counties of large and small metropolitan areas, the urban core market share has fallen compared to pre-Covid levels,” NAHB Chairman Alicia Huey, a Birmingham, Alabama-based custom house builder and developer, stated.

“During the fourth quarter of 2019, urban core markets of small and large metro areas represented 47.2% of the single-family market. This share declined to 44.5% in the fourth quarter of 2022, representing a persistent shift in buyer preferences to live outside of densely populated areas.”

Rural markets (micro counties and non-metro micro counties) saw the greatest increase in single-family market share, growing from 9.4% in the fourth quarter of 2019 to 11.8% in the fourth quarter of 2022.

“Due to aggressive federal reserve monetary policy and high mortgage rates, all submarkets in the HBGI posted lower single-family growth rates in the fourth quarter of 2022 than a year earlier,” NAHB Chief Economist Robert Dietz added.

“Rural areas were the only market with a positive single-family home building growth rate in the final quarter of 2022.”

The following market shares in single-family home building are shown in the fourth quarter HBGI:

• 16.0% in large metro core counties
• 24.7% in large metro suburban counties
• 9.5% in large metro outlying counties
• 28.5% in small metro core counties
• 9.5% in small metro outlying areas
• 7.4% in micro counties
• 4.4% in non-metro/micro counties

Meanwhile, the multifamily building market remains elevated beyond historical levels, with growth rates above 15% in six of the seven submarkets during the fourth quarter of 2022.

Large metro core counties, on the other hand, were an exception, with the slowest growth rate of 1.5% from the fourth quarter of 2022.