According to the National Association of Home Builders’ latest Home Building Geography Index, residential construction volume continued to shift toward smaller metro cores and suburban areas in the second quarter of 2021, with an especially strong shift visible in the multifamily sector.
Multifamily residential construction grew by 14.3% in small metro urban cores and 25.5% in small metro suburban areas in the second quarter, but declined by 0.5% in large metro cores.
In the single-family home building sector, construction in suburbs and exurbs of medium-sized cities made up 18.1% of single-family construction, up 0.8 percentage points from Q4 2019. The bulk of construction took place in large and medium urban cores, down 1.2 percentage points over the same period.
“The trend of construction shifting from high-density metro areas to more affordable regions, which accelerated at the beginning of the pandemic early last year, appears to be continuing,” says NAHB Chairman Chuck Fowke. “Lower land and labor costs, and lower regulatory burdens in suburban and exurban markets make it more appealing to build in these communities. And workers are increasingly flocking to these areas due to expanded teleworking practices and lower housing costs.”
“There was a marked increase in new apartment construction outside large metro areas as people have greater flexibility to live and work in more affordable markets,” said NAHB Chief Economist Robert Dietz. “Similarly for the single-family sector, the HBGI data revealed that construction growth occurred more proportionally in these more affordable areas as well, while declining in terms of market share in the most expensive counties.”
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