Shift in Single-Family Home Building Toward Smaller Markets Continues
Home building activity has been slowing in large, metro urban areas over the past 30 months, according to new findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI), and there are declines in housing affordability in high-cost and highly regulated markets as interest rates increased.
“The geography of home building has shifted over the last two and half years, with more single-family and multifamily construction occurring in lower density markets,” said NAHB Chief Economist Robert Dietz. “This shift was first caused by the initial impact of [COVID-19] on housing demand, which favored lower density neighborhoods. The shift continued in recent months due to housing affordability conditions that are causing both prospective renters and buyers to expand their geographic search for housing, aided by hybrid work patterns that allow for a combination of remote and office work.”
“Looking at the last 12 months, single-family production has slowed in all regional submarkets, both large and small, due to ongoing building material production bottlenecks, construction labor shortages, and the Federal Reserve’s tightening monetary policy,” said NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Georgia.