Single-family building growth slows in big suburbs
Tuesday, June 7, 2022 from Floor Covering Weekly
“As the year has progressed, we have seen signs of an increasing slowdown in the single-family market,” said NAHB chairman Jerry Konter, a home builder and developer from Savannah, Ga. “Ongoing building material production bottlenecks have delayed or stalled home building projects, construction labor shortages are running near an all-time high of 400,000 workers and more recently the rapid runup in mortgage rates have all combined to exacerbate the housing affordability crisis.”
“Single-family growth rates have slowed in nearly all regional submarkets over the past year due primarily to rising construction costs that have seen building material costs rise 19 percent year-over-year,” said NAHB chief economist Robert Dietz. “The more pronounced drop in growth for the large suburban markets is due to the easing of the rapid shift of home buyer preferences for the suburbs in the aftermath of the COVID-19 pandemic.”
On the multifamily front, Dietz noted that apartment construction growth is far outpacing single-family building in all regional geographies. “Low rental occupancy rates and rising rents give multifamily developers confidence to continue building despite rising costs for land, labor and materials,” he said.
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.
Key findings from the first quarter HBGI show that four-quarter moving average single-family growth rates in:
–Large metro suburban counties fell the sharpest, from 18.7 percent in the first quarter of 2021 to 5.2 percent in the first quarter of 2022.
–Large metro core counties very marginally slowed down from 9.5 percent in the first quarter of 2021 to 8.8 percent in the first quarter of 2022.
–Micro counties (small towns) was the only region to post an increase in growth, a 3.9 percentage point increase to 16.7 percent.
The first quarter HBGI shows the following regional market shares in single-family home building:
–16.6 percent in large metro core counties
–24.8 percent in large metro suburban counties
–29.2 percent in small metro core counties
–18.8 percent in outlying counties of large and small metro areas
–10.6 percent in rural areas
The multifamily market tells a different story, as the HBGI’s submarkets in multifamily home building showed the following increase in growth between the first quarter of 2021 and the first quarter of 2022 for large and small markets:
–Large metro core counties solidly recovered from a negative 3.6 percent growth rate to a positive 17.4 percent rate.
–Large metro suburban counties sharply rebounded from a negative 9.5 percent growth rate to a positive 31.4 percent rate.
–Low density counties posted an increase from a 5 percent growth rate to a 37 percent rate.
The first quarter HBGI finds that 36.9 percent of multifamily development occurred within large metro core areas, 25.8 percent in large metro suburbs, 23.5 percent in small metro core areas and 13.7 percent in other submarkets.