Lack of inventory helped push single-family home construction upward for all regions in the U.S. to close out 2024, according to the latest National Association of Home Builders’ (NAHB) Home Building Geography Index (HGBI).
“Single-family housing construction ended the year with growth as a shortage of existing homes for sale continues to increase demand for newly built homes,” detailed NAHB Chairman Buddy Hughes. “Multifamily construction was lackluster in high-density areas, while construction in smaller counties continued to grow and gain marketshare”
NAHB Chief Economist Robert Dietz chose to highlight the economic uncertainty facing the nation when detailing how the single-family construction piece will fit into the greater housing economy puzzle.
“Single-family construction has been holding remarkably steady, despite elevated mortgage rates and tight lending standards for construction and development loans,” said Dietz. “Upside and downside risks will become clearer as the new year progresses. An easing regulatory environment and tax cuts could act as tailwinds, but tariffs and potentially higher deficits could dampen market momentum. Additionally, a growing trend away from work-from-home could increase building activity in inner suburbs in the quarters ahead.”
The HGBI is a quarterly measurement of building conditions in the U.S. and uses county-level data about single and multifamily permits to gauge the level of housing construction growth in various urban and rural areas. The index has seen growth in four consecutive quarters for single-family homes across the seven key geographic and high- and low-density areas.
According to the HGBI, if new single-family home construction growth continues to be steadily positive through the beginning of 2025, anticipated Federal Reserve cuts later this year could galvanize new construction and keep single-family home building at a more normalized pace.
The HGBI tracked single family homebuilding marketshares in several key demographics, but the largest marketshares were in large metro core counties (16.1%), large metro suburban counties (24.7%) and small metro core counties (29.1%).
On the other end of the spectrum, multifamily construction saw contraction for the seventh consecutive quarter, after expanding to record highs in 2022. Many of those multifamily constructions that began in 2022 are beginning to reach completion, according to the report.
According to NAHB, the large number of units that have been under construction over the past year should help to ameliorate shelter inflation to at least some degree, especially since shelter inflation remains “sticky” and higher than other components of inflation. As inflation slows, lending conditions will improve, which will help the multifamily market gradually climb back to healthier conditions.
Multifamily marketshares were highest in large metro core counties (38.5%), large metro suburban counties (24.9%) and small metro core counties (23.3%).
For the full report, click here.
