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Single-Family and Multifamily Growth Solid but Trended in Opposite Directions in Last Half of 2021

Home Agents
By RISMedia Staff
March 2, 2022
Reading Time: 3 mins read
Single-Family and Multifamily Growth Solid but Trended in Opposite Directions in Last Half of 2021

New data show the rate of year-over-year single-family growth in all small and large metro urban, suburban and rural regional submarkets peaked in the second quarter of 2021. These findings, according to the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI), released this week, show that while expansion has cooled somewhat, growth rates in all markets remained in double-digits in the final quarter of 2021.

In contrast, multifamily growth in all these markets has been surging since the second quarter as some housing demand returned to higher density markets.

Key findings show average single-family Q4 growth rates in the following areas:

  • Large metro core counties fell from 26.3% in the second quarter to 13.0%.
  • Large metro suburban counties fell from 31.6% in the second quarter to 13.2.
  • Small metro core counties fell from 27.7% in the second quarter to 16.7.
  • Small metro outlying counties fell from 31.8% in the second quarter to 20.3.

The fourth quarter HBGI found that 51.1% of single-family home building occurred within large metropolitan statistical areas (MSAs), 38.4% in small MSAs, and 10.5% in rural markets and small towns

As the economy more fully reopened in the wake of the Covid-19 pandemic, the geography of multifamily housing demand shifted with a greater concentration in high density markets. While multifamily production also increased in rural areas, growth rates were particularly notable in large metro markets, where the largest share of apartment construction typically occurs. The HBGI shows that:

  • Large metro core counties rose from 1.2% in the second quarter to 21.8% in the fourth quarter.
  • Large metro suburban counties increased from 4.1% in the second quarter to 21.8% in the fourth quarter.
  • Small metro core counties increased from 16.0% in the second quarter to 34.9% in the fourth quarter.
  • Small metro outlying counties jumped from 23.7% in the second quarter to 70.4% in the fourth quarter.

The fourth quarter HBGI found that 66.5% of multifamily development occurred within large metropolitan statistical areas (MSAs), 27.4% in small MSAs, and 6.1% in rural markets and small towns.

The takeaway:

“As the economy reopened in most parts of the nation during the latter part of 2021, solid home building activity occurred in all regional submarkets,” said NAHB chief economist, Robert Dietz. “Multifamily production posted strong gains in all regional markets as the demand for apartments increased. Meanwhile, supply-side constraints that include ongoing labor shortages and a lack of key housing products that include garage doors, appliances and windows has delayed single-family construction times across the nation and put upward pressure on home prices.”

“The lack of resale inventory in markets across the country has sustained demand for single-family and multifamily construction in almost all areas,” said NAHB chairman, Jerry Konter, a builder and developer from Savannah Georgia. “Higher construction costs, particularly for lumber and OSB, along with a limited availability of building materials, is making it more difficult for builders to meet market demand. Policymakers must work to alleviate supply chain bottlenecks that are aggravating the housing affordability crisis.

“And while growth rates for single-family and multifamily production remained solid in the second half of 2021, Dietz cited key factors why production activity for these types of housing were trending in opposite directions.

“Single-family home building activity surged in the wake of the Covid crisis, as interest rates fell and prospective home buyers sought more space,” said Dietz. “The rebound for multifamily construction lagged somewhat as housing demand had shifted to lower density markets. As some of that demand returns, a rebound for apartment building has occurred.”

The HBGI is a quarterly measurement of building conditions across the country and uses county-level information about single- and multifamily permits to gauge housing construction growth in various urban and rural geographies.

Tags: Home Building Geography IndexNAHBNational Association of Home Builders
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RISMedia Staff

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