Per the latest results of NAHB’s Home Building Geography Index, in the third quarter of 2021, both single-family and multifamily home building showed gains in second home counties. This marked a reversal for multifamily after weakness last year. Second home counties are defined by NAHB as those having a high proportion of housing units that are not their owners’ primary residence, such as vacation homes1.
Between the third quarter of 2020 and 2021, the growth rate for single-family home building in second home markets was 36.1%, compared to an average of 23.2% for non-second home markets.
Over the last year, such second home markets have increased market shares, due to increases in hybrid work arrangements, early retirements and wealth gains in housing and stocks. The single-family second home market share grew from 9.8% to 10.8% from the third quarter of 2020 to the third quarter of 2021.
On the multifamily front, third quarter data showed a notable growth rate of 24.7% in these counties, compared to a decline of 1.2% for the previous year. Multifamily home building was stronger than the previous year in non-second home counties at 14.9%, but the rebound was stronger in second home communities.
Despite the gain for apartment construction in second home markets, there was little change in the market share, with apartment construction in non-second homes markets accounting for 95.3% of construction in the third quarter, compared to 95.6% in the second.
The HBGI’s regional classification’s distribution among high-concentration second home counties reveals that almost three-fourths of such counties lie in rural areas, technically defined as non-metro or non-micro counties. The full distribution is shown below.
The second home data are based on the Census Bureau 2018 American Community Survey related to qualification for the mortgage interest deduction and do include for-sale multifamily units, i.e., condos, in the second home tally.
- The threshold that was selected for a county to be considered a high-concentration second home county was 15% and based on the estimated distribution of proportions among the HBGI’s 3,113 counties. The distribution was found to be heavily left-skewed, with just over 80% of counties showing less than 15% of their housing stock to be second homes.