A recent report from the National Association of Home Builders (NAHB) reveals that single-family construction experienced growth across all geographic regions at the end of 2024. The fourth quarter data from the NAHB Home Building Geography Index (HGBI) highlights a lack of existing home inventory as a key driver for this growth.
"Single-family housing construction ended the year with growth as a shortage of existing homes for sale continues to increase demand for newly built homes," stated NAHB Chairman Buddy Hughes, who is also a home builder and developer from Lexington, N.C. He noted that while multifamily construction lagged in high-density areas, smaller counties saw continued growth and gained market share.
NAHB Chief Economist Robert Dietz commented on the stability of single-family construction despite challenges such as elevated mortgage rates and tight lending standards. "Upside and downside risks will become clearer as the new year progresses," he said. Dietz pointed out that an easing regulatory environment and tax cuts could benefit the market, whereas tariffs and potential higher deficits might hinder momentum. He also mentioned that a shift away from work-from-home could lead to increased building activity in inner suburbs.
The HBGI is a quarterly measurement that assesses building conditions using county-level information about single- and multifamily permits. It provides insights into housing construction growth in various urban and rural geographies.
The index has shown four consecutive quarters of single-family growth across seven key geographic areas. If this positive trend continues into early 2025, anticipated Federal Reserve rate cuts later in the year could further boost new construction, maintaining single-family home building at a normalized pace.
In terms of market shares for single-family home building during the fourth quarter:
- Large metro core counties: 16.1%
- Large metro suburban counties: 24.7%
- Large metro outlying counties: 9.4%
- Small metro core counties: 29.1%
- Small metro outlying areas: 10.0%
- Micro counties: 6.3%
- Non-metro/micro counties: 4.2%
Multifamily construction faced challenges in high-density areas, which have experienced seven consecutive quarters of contraction after record highs in 2022. However, many units initiated during those peak times are nearing completion, which could help address shelter inflation issues.
Improved lending conditions are expected as inflation slows down, potentially aiding the recovery of the multifamily market to healthier levels.
For multifamily home building market shares in the fourth quarter:
- Large metro core counties: 38.5%
- Large metro suburban counties: 24.9%
- Large metro outlying counties: 4.0%
- Small metro core counties: 23.3%
- Small metro outlying areas: 4.9%
- Micro counties: 3.3%
- Non-metro/micro counties: 1.1%
The complete HBGI data detailing geographic market shares and growth rates is available online.
