Eye On Housing
The suburban shift in home building to meet growing buyer preferences for lower density, lower cost markets stemming from the COVID-19 pandemic that was first reported in the second quarter National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) has continued throughout the rest of 2020.
Single-family construction continued to overperform in suburbs, exurbs and rural communities, according to fourth quarter HBGI data. This continuing trend is a direct result of the pandemic; as more workers were able to telecommute and preferences shifted favoring larger homes, these changes prompted buyers and renters to seek out more affordable markets in order to accommodate home offices, home gyms and specialty rooms.
Single-family residential construction staged a sharp rebound through the second half of 2020, after declining in the second quarter, with pronounced results in core counties of small metro areas and suburbs and exurbs of large and small metro areas.
Fourth quarter HBGI data reveal a clear shift in the geography of home building for 2020 as a whole:
- Outlying counties of smaller metro areas experienced a 20.7 percent growth rate for the year;
- Small metro core areas posted a 15.7 percent annual growth rate;
- Large metro suburbs registered a 15.1 percent yearly gain; and
- Large metro core areas (close-in residential areas) posted the slowest gain, with just a 9.1 percent growth rate.
Lower-density markets gained 1 percentage point in their combined market share of home building over 2020, ending with 48.6% at the end of the fourth quarter. This represented an acceleration of an existing trend due to affordability conditions.
While all regional submarkets showed growth in the fourth quarter, the submarkets of large metro areas (core and suburban counties, and exurbs) lost traction as evidenced in their declining market shares. These areas saw their share of single-family home building decline from 52.4% to 51.4%, a statistically significant decline.
Small metro areas’ outlying counties and counties classified as belonging neither to metropolitan statistical areas nor micropolitan statistical areas gained market share over the last year, increasing from 12.5% at the end of 2019 to 13.1% at the end of 2020. The HBGI’s small metro core counties are shown below:
Forthcoming HBGI analyses of Q4 2020 data will examine multifamily residential construction and a new, featured category for this quarter, a Diversity Index, which classifies the homebuilding market based on county-level measurements of racial and ethnic heterogeneity.
If buyers want less density why in the world is TAB fighting HB3883 so hard crying about density limits to protect the Hill Country’s lack of groundwater. Are you unaware that dense development slows recharge even more?