More residential construction is taking place in low-density suburbs and outlying areas due to factors affecting housing affordability, such as a lack of buildable lots, higher home building costs, and a shortage of construction workers. These findings are part of the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the third quarter of 2024.
"The trend of construction expansion in lower density areas occurred prior to and during the Covid pandemic, as many households chose to move out of areas where population density was highest to take advantage of additional telecommuting flexibility and the ability to purchase larger homes in areas of the country where housing is more affordable," said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. "Single-family construction did continue to show growth across most HBGI geographic areas in the third quarter, albeit at a slower rate than compared to the same time period last year, even as mortgage rates remained high."
Harris also noted that multifamily construction across much of the nation in the third quarter of 2024 remained lower than last year. "The exception was in lower density areas, as housing affordability issues remain a key concern, and populations have increased outside of urban centers."
"Regulations and NIMBY policies create significant headwinds for builders to construct affordable housing in urban centers, which has created this shift in residential construction to low-density areas," said NAHB Chief Economist Robert Dietz. "Policymakers at all levels of government need to eliminate excessive regulations, ease permitting roadblocks and promote careers in the skilled trades to allow builders to construct more homes and apartments across the nation."
Currently, 50% of the U.S. population lives in counties ranked between the 90th and 100th percentile for population density. This indicates that half reside within the top 10% high-density regions nationwide. Previously constituting just under 40% of single-family constructions back in early 2018, these high-density counties now account for only 36%.
This decline began before Covid-19; market share fell from 39.7% in early 2018 down further over two years through early 2022 reaching approximately around35%. Since then until now it has stabilized slightly above35%.
The third-quarter HBGI reveals specific market shares within single-family homebuilding:
- Large metro core counties:16.1%
- Large metro suburban counties:24.9%
- Large metro outlying counties:9.4%
- Small metro core counties:29%
- Small metro outlying areas:10%
- Micro-counties :6 .4 %
- Non-metro/micro-counties :4 .2 %
Meanwhile , multifamily constructions' share within highly populated zones decreased from68 .5 %in early2018to63 .2 %nowadays; most reduction occurred pre-pandemic with stabilization near64 %since then .
The following distribution applies regarding multifamily buildings:
-Large metropolitan cores hold38 .7 %of this segment
-Large suburbans possess24 .7 %
-Outliers capture only about four percent
-Small metros claim nearly one-fourth(23 .6 %)
-Outliers here make up close five percent
-Micro-county contribution stands at roughly three percent while non-metros/micros barely exceed one percent
Comprehensive details on geographic market shares alongside growth rates are available via full HBGI data access.
