Single-Family and Multifamily Production Headed in Opposite Directions Across Geographies

Fueled by a lack of existing inventory and pent-up demand, single-family permit growth is occurring across all tracked geographic regions of the nation. The opposite holds true for the multifamily sector, according to the latest findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the first quarter of 2024.

After continued declines in the growth rates of the single-family HBGI, all markets moved into positive territory for single-family construction. This marks the first time since the first quarter of 2021 for which all regions are showing year-over-year growth. Single-family growth rates declined to lows in the first quarter of 2023, but as lack of existing inventory and pent-up demand started to have a larger effect, single-family construction moved upwards over the year. The highest growth was in large metro – core counties at 13.5% while the smallest was in micro counties, at 1.5%.

Looking at single-family HBGI market shares, small metro – core counties continued to have the largest market share at 28.8%. The market share for small metro – core counties has been hovering around 29% market share since the pandemic. The largest shift in market share since the first quarter of 2020 has been seen in large metro – core counties, falling 2.2 percentage points from 18.3% to 16.1%. Over this same period, small metro – outlying counties have seen the largest increase, up 1.2 percentage points from 8.8% to 10.0%.

In the multifamily sector, the HBGI year-over-year changes turned negative for all markets in the first quarter, the first time in the HBGI data. The largest decline for multifamily was in large metro – core counties, down 24.1%, while the smallest decline was in non metro/micro counties down 4.7%. Multifamily construction has cooled as there are currently over 900,000 multifamily units under construction, the highest level since 1973. Tighter financial conditions are also making it more difficult for builders to start multifamily projects.   

Multifamily market shares showed some major changes over the quarter, as the largest multifamily market, large metro – core counties, fell 0.3 percentage points over the quarter down to 37.6%. The large metro – suburban counties market share increased the most over the quarter, up 0.5 percentage points to 26.8%.

The first quarter of 2024 HBGI data can be found at http://nahb.org/hbgi.