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Single-Family Construction Slows Post-Covid



DECEMBER 6, 2022

By Kerry Smith


The single-family boom in hot markets’ exurbs is waning as the pandemic fades, though there’s also an industry-wide slowdown, according to NAHB’s quarterly analysis.


WASHINGTON – The big jump in single-family home building activity in exurbs and outer suburbs sparked by the pandemic shutdowns has shown a marked decline over the past 12 months, according to the latest findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the third quarter of 2022.


“The single-family construction slowdown is not just limited to regions of the country that experienced the fastest production growth over the past year,” says NAHB Chairman Jerry Konter. “Home building activity has slowed in nearly all regions and large and small metro markets as high mortgage rates, elevated inflation and stubbornly high construction costs act as a drag on consumer demand and housing affordability.”


“While the bulk of single-family construction continues to occur in the South and lower density markets where job conditions are more favorable and housing costs lower, the data clearly show these areas are acting as a leading indicator for the entire housing market,” says NAHB Chief Economist Robert Dietz. “They are registering the largest production declines, even as other regions – including large metro core and suburban counties – are displaying weakness.”


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 index shows that large-metro outlying counties (exurban areas) registered the largest 12-month decline in single-family production, falling from a 31.9% growth rate in the third quarter of 2021 to a minus 4.4% rate in the third quarter of 2022.


Smaller metro outlying counties also saw significant deceleration, registering a 30.6% percentage point drop in growth rate during the same period. Urban core areas in both large and small metro areas also posted negative growth rates during this timeframe.


Rural counties, including micro counties and non-metro/micro counties, were the only counties to post a positive year-over-year growth rate.


However, the multifamily market tells a different story, as the HBGI’s submarkets in multifamily home building showed increased growth year-to-year in 3Q for both large and small markets as metro area economies reopened following COVID-era restrictions:


Multifamily construction in large metro suburban counties increased from an 18% growth rate to a 27.5% rate, and large metro core counties experienced a 7.1 percentage point increase.

Large metro outlying counties decreased from a 44.1% growth rate to a 31% rate.

Other key findings from the third quarter HBGI show that building activity continued to shift away from centralized markets toward more outer, smaller areas:


Looking back over almost three years – from the first quarter of 2020 to the third quarter of 2022 – the market share for single-family home building in large metro core and inner suburbs fell from 44% to 41.3%.


In contrast, single-family home building in outer suburbs and exurban areas in large and medium sized metros increased from 18% to 19% during the same timeframe.

Despite the recent uptick, high density multifamily construction in large metro core areas registered a similar decline during this two-and-a-half-year period, falling from 41% to 38.4%.



© 2022 Florida Realtors®

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