The National Association of Home Builders’ Home Building Geography Index (HBGI) tracks the markets of single-family and multifamily residential construction and their recovery following the Great Recession. In the first quarter of 2019, the first “cut” of the HBGI was introduced, which was an urban density-based delineation of the housing market into seven geographical “regions”. The first quarter HBGI analysis found that single-family construction experienced a slow market share gain in small city core areas following the Great Recession. In contrast, there was a relatively stronger market-share expansion for outlying counties of large metro areas (exurbs) given relatively more affordable land.
The second quarter HBGI data indicate relative stability in the single-family regional market shares. Small county core areas and large metro suburban counties remain the largest single-family building areas with market shares of 28.6% and 26.7% respectively.
In contrast, for multifamily home construction, the market shares decreased somewhat in suburban counties of large metro areas and increased in core counties of smaller metro areas. The largest building region for multifamily construction remained large metro core areas (at 41% market share), but there was a gain for the third largest region (small metro cores), which increased to a 22% market share.
Consistent with expectations of apartment construction moving from high land-cost areas to low land-cost areas, the data from the second quarter of 2019 show a shift in the shares of new permit issuances from large metro areas to smaller metro areas, small towns, and rural areas. Even exurbs, i.e., outlying counties of large metro areas, which posted single-family growth in a generally weak first quarter and are considered relatively more affordable, experienced a decline in market share in multifamily construction as apartment construction modestly expands to other building regions.