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.
That’s according to the latest findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the fourth quarter of 2022.
“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,” said NAHB Chairman Alicia Huey, a custom 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.”
The largest growth in single-family market share came in rural markets, rising from 9.4 percent in the fourth quarter of 2019 to a share of 11.8 percent in the fourth quarter of 2022.
“Rural areas were the only market with a positive single-family home building growth rate in the final quarter of 2022,” said NAHB chief economist Robert Dietz.
The fourth quarter HBGI shows the following market shares in single-family home building:
• 16.0% in large metro core counties
• 24.7% in large metro suburban counties
• 9.5% in large metro outlying counties
• 28.5% in small metro core counties
• 9.5% in small metro outlying areas
• 7.4% in micro counties
• 4.4% in non-metro/micro counties
Meanwhile, the multi-family 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.
