Metro Areas Trail Lower Density Markets for Apartment Construction Growth

2022-06-17T09:15:36-05:00

In the first quarter of 2022, multifamily home building showed greater growth across all regional markets compared to the first quarter of 2021, per the NAHB’s Home Building Geography Index (HBGI). Apartment construction far outpaced single-family building in all regional geographies but especially in lower density markets1. Low rental vacancy rates and rising rents gave multifamily developers confidence to continue building despite rising costs for land, labor, and materials. Receding virus concerns have also enticed prospective renters to move closer to urban centers. Multifamily home building in heavily populated urban areas, consisting of large metro area core counties, large metro area suburban counties, and small metro area core counties, grew by 17.4%, 31.4%, and 33.7%, respectively, in the first quarter of 2022. In the same quarter of the previous year, large metro area core counties and suburban counties multifamily home building declined by 3.6% and 9.5%, respectively, and small metro areas’ core counties grew by 5.5%. Together, urban areas make up 87% of the multifamily home building market. Lower density markets’ combined market share increased from the first quarter of 2021 by 1.4 percentage points to 13.7%. Large metro area core counties lost significant market share in the first quarter of 2022, registering a 3.3 percentage point decline from the first quarter of 2021 to 36.9%, its largest year-over-year market share loss on the HBGI’s record. It was also the largest such loss among all the regional submarkets throughout the span of the HBGI. The first quarter data additionally show more activity in lower density markets. On a four-quarter moving average year-over-year basis, multifamily home building in micro counties, large metro area outlying counties, small metro area outlying counties, and non-metro, non-micro counties grew by 44%, 45%, 52%, and 83%, respectively. In the first quarter of the previous year, multifamily home building in these geographies grew by 10.1%, 6.0%, 7.7%, and -5.8%. In contrast to previous HBGI iterations, this HBGI analysis reinterprets the definition of lower density markets to include large metro outlying counties counties and exclude small metro area core counties. This allows for a better identification of trends that emerged in the Q1 2022 data. Related ‹ Housing Starts Slow in MayTags: apartment buildings, COVID-19, HBGI, home building geography index, Metropolitan Statistical Area, multifamily construction, regional differences, rental properties, rental vacancy rate, suburban

Metro Areas Trail Lower Density Markets for Apartment Construction Growth2022-06-17T09:15:36-05:00

Large Metro Suburban Single-family Construction Slows

2022-06-07T09:18:22-05:00

By Litic Murali on June 7, 2022 • Recent developments in the first quarter of 2022 per NAHB’s Home Building Geography Index (HBGI), indicate single-family home building slowing in suburbs, with most other regional geographies following suit. Following the aftermath of COVID-19, home buyer preferences for the suburbs have eased. Supply-chain challenges and unfavorable economic conditions have reduced the pace of single-family residential construction across all regional submarkets. The effect was most pronounced in high-cost areas such as large metro suburban counties, with growth decreasing from 18.7% in the first quarter of 2021 to 5.2% in the first quarter of 2022. Large metro core counties by contrast experienced the smallest growth reduction for that period, a 0.7 percentage point decline to 8.8%. Micro counties were the only submarket to post an increase in the growth rate from the first quarter of 2021, a 3.9 percentage point increase to 16.7%. Rampant inflation, one of the economic problems in the first quarter of 2022, has driven up material costs but even when adjusted for inflation, they set a record high at the end of 2021. Market share changes also reflected the slowdown of large metro suburban counties’ single-family construction. On a four-quarter moving average, year-over year basis, large metro suburban counties’ single-family construction’s market share dropped from the first quarter of 2021 by 1.3 percentage points to 24.8%. Large metro core counties’ market share dropped by 0.3 percentage points to 16.6%. All other regions, which can be grouped as “lower-density submarkets”, captured the above market share decreases. Large metro areas’ outlying counties’ market share increased the most, by 0.5 percentage points to 9.6% and non-metro, non-micro counties increased the least, by 0.1 percentage points to 4.2%. It deserves noting that the latter category has historically maintained this market share, only wavering by 0.1 percentage points downward in most quarters. An upcoming post of this HBGI iteration will identify the first quarter trends in multifamily home building. Related ‹ How a Home Purchase Boosts Consumer SpendingTags: construction materials cost, HBGI, home building geography index, home buyer preferences, inflation, market share, Material Costs, nonmetro, regional differences, single-family construction, suburban, supply chains

Large Metro Suburban Single-family Construction Slows2022-06-07T09:18:22-05:00

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