Rural Markets’ Home Building Market Shares in 2021

In the fourth quarter of 2021, the market shares of single-family and multifamily home building in rural submarkets, as identified by NAHB’s Home Building Geography Index (HBGI), increased from the fourth quarter of 2020. Evolving market conditions were primarily responsible for the market share gains. Rural areas’ home building market share changes indirectly reflected differing growth rates among all regional submarkets.  The data show higher market share gains for rural areas in multifamily home building than in single-family home building.

The HBGI defines rural areas to include “micro counties” and “non-metro/micro counties”. The Census Bureau designates an area as rural if it is not classified as an “urban area” or an “urban cluster”, thus excluding submarkets that are part of Metropolitan Statistical Areas (MSAs). Micro counties and non-metro/micro counties make up 8.4% and 5.6% of the total U.S. population, respectively.

Until the third quarter of 2021, single-family home building’s rural market share was consistent with the market shares maintained since 2017, 10.1%. In the third and fourth quarters, it posted quarterly gains of 0.2 percentage points, ending the year at 10.5%. In the fourth quarter of 2020, the share was 10.0%. Single-family home building’s growth rate in the fourth quarter of 2021 in rural counties was 15.9% on a four-quarter, moving average year-over-year basis. Its components, micro counties and non-metro/micro counties grew by 22.8% and 19.5%, respectively, by the same measure.

Multifamily home building’s rural market share gains in 2021 were unprecedented in the HBGI, reaching its largest market share on the HBGI’s record of 6.1% in the fourth quarter. In the fourth quarter of 2020, it was 4.6%. Rural multifamily home building market shares have shown more volatility in general than their single-family counterpart. Relative to all submarkets, micro counties’ market share of 4.1% in the fourth quarter of 2021 was twice that of non-metro/micro counties. In micro counties, permit issuances almost doubled, resulting in a growth rate of 91.2%. Rural market’s overall growth rate in multifamily home building was 71.0%.