Multifamily Construction Continues to Expand Outside Metro Core Areas

The most recent Home Building Geography Index (HBGI) shows that multifamily home building has continued to experience strong growth since the start of the pandemic. Due to the low single-family housing inventory and elevated unaffordability of single-family housing caused by high house prices and higher mortgage rates, demand for multifamily housing has remained solid over the past year.

Except for the large metro outlying county market, all other markets had higher growth rates in 2022 when compared to 2021. The growth rate in large metro outlying counties went down from 44.1% in the third quarter of 2021 to 31.0% in the third quarter of 2022. The largest yearly increase in multifamily growth rate was in micro counties which experienced as 15.3 percentage point increase in growth rate, from 4.2% in the third quarter of 2021 to 19.5% in the third quarter of 2022.

The smallest yearly increase was 7.1 percentage points which occurred in the large metros core county market, increasing from 9.8% to 16.9% over the year. Even though the large metro core county market featured the smallest increase in growth rate compared to last year, that region continued to dominate market share of the multifamily market.

The multifamily market share has changed slightly from pre-pandemic levels. Despite the large metro core counties continuing to have the largest market share, its market share has been slowly decreasing since the onset of the pandemic. The largest increase in market share has been in large metros suburban counties and small metros core counties.

Multifamily construction has slowly expanded out of the core counties of large metros into less densely populated areas as individuals and families move out of the city. The large metro core county market made up 38.4% of the multifamily market in the third quarter of 2022, down 3.3 percentage points from the fourth quarter of 2019. The small metro core county market grew 2.2 percentage points from 20.8% in the fourth quarter of 2019 to 23.0% in the third quarter of 2022.

The Q3 2022 HBGI data can be found at

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