NAHB’s featured topic for the second quarter HBGI reveals that 17.5% of single-family and 8.6% of multifamily construction takes place in second home areas. Recent NAHB analysis found that the total count of second homes across the US was 6.5 million, which accounts for 4.6% of the total housing stock. For this analysis, a second home area is a county that has a second home share greater than 10.3% of the county’s total housing stock (these counties fall within the 75th and above percentile of the second home stock share distribution).  There are 788 counties that are considered a second home area based on this definition. Single-family Single-family permit data shows that the market share for construction in second home areas has grown by over four percentage points in the past nine years. The earliest data, which is the fourth quarter of 2015, shows that second home areas had a market share of 13.2%. As of the second quarter of 2024, the market share for this geography increased to 17.5%. However, this latest reading is down from a peak of 18.3% in the first quarter of 2023.   The peak growth rate in construction for second homes areas was at 38.5% in the third quarter of 2021. The first recorded decline in the growth rate occurred in the third quarter of 2022. This downward growth rate was followed by five quarters of declines until the first quarter of 2024.   Second home areas have averaged a growth rate of 9.1% between the fourth quarter of 2015 and the second quarter of 2024, while non-second home areas averaged single-family a growth rate of 5.1% over the same period.   Multifamily Although smaller, the market share for second home areas has also grown for multifamily construction. The market share was 5.5% in the fourth quarter of 2015 and is now 8.6%, a 3.1 percentage point increase. This increase in market share has been more volatile than single-family, as growth in construction has not been as consistent for multifamily in second home areas.  There have been three periods where construction growth for multifamily experienced declines in these areas, such as in 2017 and early 2021. The third period of decline is ongoing, as there have been two consecutive quarters where the growth rate has been negative to start 2024. The latest growth rate is a11.8% decline. This is down from a peak of 53.1% in the third quarter of 2022, as multifamily construction has slowed nationwide.  Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Despite high mortgage rates, the lack of resale homes and pent-up demand drove solid growth in single-family permits across nearly all regions in the second quarter. In contrast, multifamily construction permit activity experienced declines across all regions for the second quarter of 2024. These trends are tabulated from the recent release of the National Association of Home Builders’ (NAHB) Home Building Geography Index (HBGI). Single-Family All markets for single-family construction saw higher growth in the second quarter compared to the first quarter. In contrast to the second quarter of 2023, which experienced declines across all markets, this year shows a clear reversal. Large metro core counties had the largest growth rate for the second consecutive quarter at 17.6%, while micro counties continued to have the lowest for the third straight quarter, at 3.4%. Looking at single-family HBGI market shares, small metro core counties continued to have the largest market share at 28.9%. Large metro suburban counties are the only other market with over 20% market share, at 25.0% in the second quarter. The smallest market share continued to be non metro/micro counties at 4.3%. However, this market remains almost a percentage point higher than what it was pre-pandemic in 2019. Multifamily In the multifamily sector, the HBGI year-over-year growth continued to post declines for all markets in the second quarter. This can be contributed to high levels of multifamily units under construction and tighter financial conditions. Only two markets had larger declines than the first quarter, with large metro suburban counties down 21.1% and non metro/micro counties down 14.8%. Notably, non metro/micro counties were the last market to experience a decline in multifamily construction. These counties were an area of growth in the second, third and fourth quarters of last year while all other markets experience declines or negligible growth. Multifamily market shares in the HBGI remained similar to the first quarter, with large metro core counties having the largest market share at 40.1%. The smallest market was non metro/micro counties, with a 1.1% market share. The second quarter of 2024 HBGI data along with an interactive HBGI map can be found at http://nahb.org/hbgi. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.