Areas of the U.S. with lower population densities are seeing an increase in multifamily construction. At the same time, in the nation’s largest markets, growth has turned negative, according to the Home Building Geography Index (HBGI) for 1Q 2025, just published by the National Association of Home Builders.
“The largest construction gains have been in low population density areas, with the combined market share for small metro outlying counties, micro counties, and non-metro/micro counties growing 2.2 percentage points from 7.8% to 10% between 1Q 2024 and 1Q 2025,” the HBGI revealed. It tracks multifamily and single-family permits across seven U.S. geographies, categorized by population density.
Multifamily construction jumped 29.3% in micro counties, 18.5% in small metro outlying counties and 3.7% in non-metro/micro counties. It also rose 33.2% in large metro outlying areas in 1Q 2025 – the highest level since 2Q 2022, when it rose 71.8%.
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However, the multifamily market share of large metro core counties dropped 4.8 percentage points year-over-year – even though most construction takes place in these areas.
The HBGI finding of growth in multifamily housing in regions outside city cores aligns with a recent analysis by Point2Homes. That breakdown showed the growth of renter households in suburbs is outpacing their rate of increase in five of the 20 largest U.S. metros and that developers are expanding outwards in the towns and suburbs surrounding cities proper.
Meanwhile, single-family construction growth slowed across all markets in 1Q 2025, the HBGI reported. Small metro core counties had the highest growth, increasing 3.2% year-over-year on a four-quarter moving average basis. Large metro counties saw their four-quarter moving average growth rate fall from 9.4% to 1.3%, down 8.1 percentage points.
Single-family construction also dropped 0.2% in large metro outlying areas and 0.4% in non-metro/micro counties in the first quarter. Most growth – 29.2% -- occurred in small metro core counties. The lowest market share – 4.2% -- was for non-metro/micro areas.
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