Led by larger urban metro markets, single-family growth rates are showing signs of a turnaround as moderating mortgage rates and a lack of existing inventory are contributing to a gradual upward trend, according to the latest findings from the National Association of Home Builders' Home Building Geography Index for the fourth quarter of 2023. Meanwhile, new data on overall production in coastal areas shows that single-family home building is holding steady while multifamily is falling.
Urban metro and county markets
Breaking down the nation's seven metro and county areas, the fourth-quarter HBGI shows the following market shares in single-family home building:
- 16% in large metro core counties
- 25% in large metro suburban counties
- 9.6% in large metro outlying counties
- 28.7% in small metro core counties
- 10% in small metro outlying areas
- 6.5% in micro counties
- 4.2% in non-metro/micro counties
Coastal versus non-coastal areas
New analysis of U.S. coastal counties in the HBGI report reveals around 25% of single-family construction consistently takes place in coastal counties, with multifamily production accounting for about one-third of new building in coastal areas.
For the single-family market, the market share for coastal counties and non-coastal counties has held remarkably steady since 2014, with coastal counties in the fourth quarter of 2023 making up 24.7% of new home building while non-coastal counties have a market share of 75.3%.
The market shares for multifamily tell a different story. New multifamily construction in coastal counties has fallen from the fourth quarter of 2014, when the market share was 36.6%, and now stands at 30.3%.
NAHB's take on the data
"While all urban, rural, metro and county area single-family markets experienced double-digit production declines in the third quarter, construction began to turn the corner in the final quarter of the year," says NAHB Chairman Carl Harris. "Four out of the seven markets had declines of less than 5% while one market—small, metro outlying counties—grew at a modest 0.4% rate. This positive trend is due in large part to moderating interest rates and the mortgage 'lock-in' effect that is dissuading many home owners with low mortgage rates from listing their homes."
"Single-family construction showed gradual growth across much of the nation in the fourth quarter compared to the previous quarter, and this positive movement corresponds with our latest builder surveys," says NAHB Chief Economist Robert Dietz. "Meanwhile, new multifamily building in large, metro suburban counties posted a negative growth rate of 20% in the fourth quarter, reflecting the tail end of an apartment building boom that reached its highest level in more than 50 years."
