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Single-Family Market Share Continues to Shift from Large Population Centers

According to the National Association of Home Builders (NAHB), while nationwide single-family housing starts have slowed in the past year, the largest drop on a percentage basis is occurring in the most dense counties, where housing costs are highest. Meanwhile, multifamily growth was robust throughout much of the nation at the end of 2022, with the notable exception in high-density markets, according to the latest findings from NAHB's Home Building Geography Index (HBGI) for the fourth quarter of 2022.

What NAHB says

“While the largest single-family market continues to be core counties of large and small metropolitan areas, the urban core market share has fallen compared to pre-Covid levels,” says NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala. “During the fourth quarter of 2019, urban core markets of small and large metro areas represented 47.2 percent of the single-family market. This share declined to 44.5 percent in the fourth quarter of 2022, representing a persistent shift in buyer preferences to live outside of densely populated areas."

“Due to aggressive federal reserve monetary policy and high mortgage rates, all submarkets in the HBGI posted lower single-family growth rates in the fourth quarter of 2022 than a year earlier,” says NAHB Chief Economist Robert Dietz. “Rural areas were the only market with a positive single-family home building growth rate in the final quarter of 2022.” 

The data

The fourth quarter HBGI shows the following market shares in single-family home building:

  • 16.0 percent in large metro core counties
  • 24.7 percent in large metro suburban counties
  • 9.5 percent in large metro outlying counties
  • 28.5 percent in small metro core counties
  • 9.5 percent in small metro outlying areas
  • 7.4 percent in micro counties
  • 4.4 percent in non-metro/micro counties

Meanwhile, the multifamily construction market remains elevated above historical levels, with six of the seven submarkets experiencing growth rates above 15 percent during the final quarter of 2022. However, large metro core counties were an outlier and registered the smallest growth rate, up only 1.5 percent from the fourth quarter of 2022.