Single-family home construction has slowed down due to factors like higher interest rates, construction costs, and material shortages. However, the first quarter of 2023 has seen a resurgence in more affordable and lower-density areas, according to the NAHB Home Building Geography Index. Large metro core counties experienced the biggest decline, while both large and small metro areas reported negative growth rates. Rural markets, on the other hand, have shown strength over the past four years, increasing their market share in single-family home building.
Market Shares in Single-Family Home Buildings (First Quarter HBGI Data)
| Location Category | Market Share |
|---|---|
| Large Metro Core Counties | 15.7% |
| Large Metro Suburban Counties | 24.5% |
| Large Metro Outlying Counties | 9.5% |
| Small Metro Core Counties | 28.6% |
| Small Metro Outlying Areas | 9.7% |
| Micro Counties | 7.5% |
| Non-Metro/Micro Counties | 4.5% |
Small metro core counties led in market shares, followed by large metro suburban counties. Large metro outlying counties had the highest growth rate, while large metro core counties had the lowest. Multifamily building is also making a comeback in densely populated areas. Despite challenges like labor shortages and tighter finance conditions, the multifamily building market remains strong, though there are potential risks of a slowdown later in the year.
For homebuyers, the impact varies depending on the location category. Those in large metro core and suburban counties may face limited supply, increased competition, and higher home prices. Homebuyers in outlying counties and smaller metro areas may have better chances of finding available homes, albeit with potential limitations and higher prices. Rural areas offer more options and potentially lower prices compared to densely populated regions.
Summary
Overall, homebuyers in large metro core counties and other densely populated areas may face the greatest challenges, with limited housing supply and potentially higher prices. Homebuyers in more rural areas and smaller metro areas may have relatively more options and potentially better affordability. However, it's important to consider that individual market conditions within each category may vary, and local factors can significantly impact the actual experience of homebuyers in those areas.
This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition are made.
"Single-Family Construction Slowdown Less Pronounced in Lower Density Markets." National Association of Home Builders, 6 June 2023, https://www.nahb.org/news-and-economics/press-releases/2023/06/single-family-construction-slowdown-less-pronounced-in-lower-density-markets.