Shift for Homes Built in Low-Density and Low-Cost Markets Since the Pandemic

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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.

 



3 replies

  1. Developments in rural areas has increased? It seems it has increased in much larger cities where developers have been able to develop land right outside the cities and called it “rural”.

    I do not see developers going into rural communities and developing homes. This is the problem with big government giving grants and loans for rural development.

    So, lets go to Aspen, Co. and build in a out skirt and call it rural affordable housing. Price it at 450,000.00 because the AMI is above 800,000.00 and get the rural grants to fund it. That’s a good price for Aspen,Co. they sell quick.

    This is just an example; Now tell me who is building in actual small rural communities, population under 20,000?

    • For what it worth, 10% of single-family homes are built in rural areas. Another 20% are built in outer suburb/exurbs. Certainly zoning rules do reduce overall levels of building.

      • My point, somewhat. Those suburb areas are not truly rural communities. They are created communities and called rural. If only 10% is built in true rural areas, where is all this grant money going?

        We now have big investors buying up buildings and creating rentals for low income families, so they say. Although only a small min. are affordable ,not all are required to meet 30% AMI. More big grants and gov. funds going into deep pockets. This is not helping our affordable housing need.

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