Home building across the nation expanded the fastest in places with the shortest commute times, according to the quarterly National Association of Home Builders (NAHB) Home Building Geography Index (HBGI). The HBGI also shows the suburban shift in new home construction to low density, low cost markets stemming largely from the COVID-19 pandemic and first reported in the second quarter of 2020 continued into 2021, as evident in the first quarter data.

The first quarter HBGI indicates that home building not only continued to overperform in lower cost markets like suburbs and exurbs, but also expanded the most rapidly for single-family and multifamily construction in areas with the shortest commutes. As workplaces increasingly adopt hybrid work models for roughly 30-40 percent of the American workforce, renters and buyers will have increased market power to minimize travel times and reduce both housing and transportation cost burdens.

With a nationwide mean commuting time of 26 minutes, the latest HBGI shows that single-family home building was the highest in the top two (longest) commute quintiles, with a combined market share of 63.6 percent. Growth in the first quarter of 2021, however, was strongest in the bottom quintile (shortest commutes), with four-quarter moving average year-over-year growth rates of 22.2 percent. Interestingly, the HBGI data show that 36.2% of the U.S. population resided in those counties that reported mean commute times of 28 minutes or more, i.e., the “Longest Commute Time” quintile.

While longer-commute areas have a much greater market share in single-family home building, the single-family construction growth rates in the first quarter of 2021 were strongest in the areas with the shortest commuting times. On the other hand, the counties with the longest commute times significantly lost market share for multifamily construction, decreasing from 40 percent to 35.6 percent over the past year. Areas with the shortest commute times posted the strongest apartment construction growth rate of 24.2 percent.

It is also useful to understand the distribution of the Mean Commute Time categories across the HBGI’s Regional submarkets. The below figure shows that distribution:

As shown above, county mean commute times of 18 minutes or less¹ (i.e., short commutes) are generally absent from Large Metro core, suburban, and counties. Such short commutes are concentrated in small metro core and rural areas.

Furthermore, the share of counties in the Longest Commute category increases within large metro areas inversely with density. For example, large metro core counties have a smaller share (32%) of their counties in the longest commute than suburban (54%) and exurban counties (72%).  This is an indication that, in general, outlying areas of large metros face longer commutes. Similarly, the Longest Commute Time quintile also holds a sizable share (30%) in outlying counties of small metro areas, as well.

The next HBGI Eye on Housing post will update the single-family and multifamily construction growth rates by the regional classifications used in prior quarterly updates.

The Q1 2021 HBGI data can be found at  http://nahb.org/hbgi.

Notes:

1. It should be noted that counties with mean commute times of 18 minutes or less represent an approximate 20% of all 3,111 counties whose commute time data was available for analysis (only two U.S. counties’ mean commute time data were not available, as shown in white on the map). This is a striking facet of the data, because it implies that only about a fifth of all the counties in the U.S. have relatively low commute times, as defined here.

Tags: commuting, COVID-19, exurbs, HBGI, home building geography index, home office, multifamily construction, single-family construction, suburban, work