The most recent Home Building Geography Index (HBGI) shows that home building activities have shifted to low-density and low-cost markets since the beginning of the COVID-19 pandemic. The market share for single-family constructions in large metro core and inner suburbs has declined from 44.5% to 41.6% from the 4th quarter of 2019 (pre-COVID), to the 2nd quarter of 2022.
Housing demand has shifted from these higher density core areas to low density markets, where homes are larger and more affordable. At the beginning of the pandemic, homebuyers desired more personal space for the work-from-home and remote learning models. Declines in housing affordability in high cost and highly regulated markets also drove homebuyers to low-density outer markets, which have a larger share of affordable homes.
NAHB’s HBGI shows that single-family home building in outer counties in large and medium sized metros has expanded to a 19% market share in the 2nd quarter of 2022 from 17.4% in the pre-COVID period. Meanwhile, the market share of new single-family constructions in rural areas increased from 9.4% to 10.4%.
Similar decentralizing trends also hold for multifamily home building from the 4th quarter of 2019 to the 2nd quarter of 2022. This market share increased from 6.8% to 7.9% in large and small metro outer markets and inched up from 20.8% to 22.9% in small metro core counties. In contrast, the market share slipped from 68.8% to 65.7% in large metro core and inner suburbs.
The Q2 2022 HBGI data can be found at http://nahb.org/hbgi.