Large Metro Markets Show Biggest Slowdown in Single-Family Construction

Rising mortgage rates and elevated construction costs have taken a toll on the pace of single-family construction in markets across the nation, with the slowdown most pronounced in large metro areas. Multifamily market growth also fell in most areas of the country, according to the latest findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the second quarter of 2023.

Across the single-family market, the 4-quarter moving average of the year-over-year growth rates remained negative for all markets in the second quarter of 2023. Between the second quarter of 2022 and the second quarter of 2023, the growth rates across all markets fell double digits, with the largest change in growth rate occurring in Large Metro – Outlying Areas. With all single-family growth rates continuing to be negative for the second consecutive quarter, the largest percentage decrease in building was in Large Metro – Core Counties at negative 24.8%. Micro Counties was the only market to post a single digit percentage decline at negative 8.7%.

Over the past four years rural markets have exhibited strength. The rural (Micro Counties and Non Metro/Micro Counties) single-family home building market share has increased from 9.4% at the end of 2019 to 11.7% by the second quarter of 2023. The combined market share for Large Metros (Core, Suburban, Outlying) remained below 50% for the second consecutive quarter as it was unchanged at 49.8%.

The multifamily market started to show signs of cooling down in the latest release of the HBGI. The year-over-year moving average growth rate for four of the seven markets fell into negative territory. Large Metro – Outlying Counties, Micro counties and Non Metro/Micro counties all remained positive. Non Metro/Micro counties had the highest growth at 26.6% while Large Metro – Core Counties was the lowest at negative 10.6%.

The multifamily market share for Large Metro – Core Counties dropped 1.2 percentage points between the first and second quarter of 2023, falling from 38.6% to 37.4%. The largest increase in market share between the quarters was in Large Metro – Outlying Counties which increased 0.6 percentage points from 26.4% to 27.0%.

The second quarter of 2023 HBGI data can be found at http://nahb.org/hbgi.


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One thought on “Large Metro Markets Show Biggest Slowdown in Single-Family Construction

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