Urban Home Building Slows As Multifamily Construction Spikes
Small towns were the only area that posted an increase in growth.
Single-family construction in large metro urban areas fell while multifamily construction there spiked, according to the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) issued this week.
The rate of year-over-year single-family construction growth in small metro urban, suburban and rural regional submarkets also slowed in the first quarter.
Large metro suburban counties fell from 18.7% in Q1 2021 to 5.2% in Q1 2022.
The only region to post an increase in growth was micro counties (small towns) – a 3.9 percentage point increase to 16.7%.
John Hunt, senior analyst, Founder & President, MarketNsight, tells GlobeSt.com “There’s no inventory, especially for homes under $300,000 which means people are moving to second tier suburbs because of price. This is happening in every market.”
NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Ga., said in prepared remarks, “Ongoing building material production bottlenecks have delayed or stalled home building projects, construction labor shortages are running near an all-time high of 400,000 workers and more recently the rapid runup in mortgage rates have all combined to exacerbate the housing affordability crisis.”
NAHB Chief Economist Robert Dietz said that the more pronounced drop in growth for the large suburban markets “is due to the easing of the rapid shift of home buyer preferences for the suburbs in the aftermath of the COVID-19 pandemic.”
MF Growth Found in Large Population Centers
Multifamily growth in large population centers posted sharp gains during the same time period, rebounding from negative growth rates.
Dietz noted that apartment construction growth is far outpacing single-family building in all regional geographies. “Low rental vacancy rates and rising rents give multifamily developers confidence to continue building despite rising costs for land, labor and materials,” he said.
Key findings from the first quarter HBGI show that four-quarter moving average single-family growth rates in:
Large metro suburban counties fell the sharpest, from 18.7% in the first quarter of 2021 to 5.2% in the first quarter of 2022.
Large metro core counties very marginally slowed down from 9.5% in the first quarter of 2021 to 8.8% in Q1 2022.