The new-homes’ growth rate fell in 3Q, as it did in the two previous quarters, says NAHB. Single-family and multifamily saw the biggest expansion in U.S. exurbs.
WASHINGTON – For the third consecutive quarter, single-family growth rates were negative for all geographic sectors of the nation, as exurban areas posted the largest increase in market share for both single-family and multifamily construction, according to the latest findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the third quarter of 2023.
“Rising mortgage rates, elevated construction costs and chronic construction labor shortages have led to negative quarterly growth rates in single-family home building for all geographic markets since the beginning of 2023,” says NAHB Chairman Alicia Huey.
But “the HBGI report shows the multifamily sector continued to post strength in two geographic areas,” she says, “large metro outlying counties (exurbs) posted a ninth consecutive quarter of positive growth while non-metro/micro counties registered positive growth for the 11th straight quarter.”
Turning a corner?
“The HBGI data continues to show that home building has slowed, but there are signs that it is beginning to turn a corner heading into the end of the year as the Federal Reserve has paused rate hikes as inflation continues to slow,” says NAHB Chief Economist Robert Dietz.
Dietz says a new analysis using personal-income-per-capita estimates from the Bureau of Economic Analysis coincides with the geographic HBGI data which shows single-family and multifamily home construction has become more concentrated in outlying areas instead of urban centers.
“Counties with higher incomes that tend to be more urban have lost home building market share in both the single-family and multifamily sectors,” Dietz says.
The HBGI is a quarterly measurement of building conditions across the country and uses county-level information about single- and multifamily permits to gauge housing construction growth in various urban and rural geographies. The lowest single-family year-over-year growth rates in the third quarter of 2023 occurred in small metro core counties, which posted a 18.6% decline. All large and small metro areas also had double-digit negative growth rates.
Meanwhile, large metro outlying counties posted the largest increase in single-family market share between the second quarter and third quarter of 2023, rising from 9.5% to 9.7%.
Overall percentage of building by area type in 3Q
- 15.9% in large metro core counties
- 24.7% in large metro suburban counties
- 9.7% in large metro outlying counties
- 28.3% in small metro core counties
- 10.0% in small metro outlying areas
- 7.0% in micro counties
- 4.4% in non-metro/micro counties
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