Small City Single-Family Building Growth Slowing


After several years of steady construction gains, single-family construction in small cities experienced a net deceleration of growth going into 2019. Such areas represent 37% of all single-family construction nationwide.

With a population of nearly 95 million, small cities in the U.S. account for about 30% of the U.S. population and therefore serve as a good “demographic and economic microcosm” of the United States, according to a recent Brookings Institution article. Under the NAHB Home Building Geography Index (HBGI), small city areas are classified into two geographies: core counties of small metropolitan areas and outlying counties of small metropolitan areas (metros with less than one million in population).

As explained in a previous post, urban areas and inner suburbs of small metropolitan areas posted the second highest year-over-year net growth rate for single family permits among all NBGI regions, albeit in an otherwise weak quarter for single-family construction.

The figure below shows growth rates (the four-quarter moving average of year-over-year growth rates) for the two small city-related regional measures. While both measures are slowing, building in urban areas/inner suburbs is holding up better. Such areas posted a 3.2% growth rate at the start of 2019. Outer suburbs of small cities were flat for the first quarter 2019 data.

This pattern suggests a slight contrast with large metro areas (with population of more than one million), where outlying areas (exurbs) are posting greater rates of expansion at the start of 2019.

Examples of urbanized areas and inner suburbs of small metropolitan areas include Tuscaloosa County in Alabama, New Haven County in Connecticut, and Lancaster County in Pennsylvania while examples of outer suburbs of small metropolitan areas include Sussex County of the Salisbury MD-DE Metropolitan Statistical Area (MSA) and Mineral County of the Cumberland MD-WV MSA.

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