How about multifamily construction growth?
The downturn in single-family construction has shown signs of bottoming out in the second quarter of 2023, according to the National Association of Home Builders (NAHB).
The latest findings of NAHB's Home Building Geography Index (HBGI) – a measure of building conditions across the country – showed that the total single-family market share in large metro core areas hit a record low of 49.8% in Q2.
All large and small metro areas also registered double-digit negative growth rates, while rural markets (defined as micro counties and non-metro counties) recorded single-digit negative growth rates:
- 15.8% in large metro core counties
- 24.6% in large metro suburban counties
- 9.4% in large metro outlying counties
- 28.5% in small metro core counties
- 9.9% in small metro outlying areas
- 7.2% in micro counties
- 4.5% in non-metro/micro counties
"While the pace of single-family construction posted a year-to-year decline in all the small and large geographic markets measured by the HBGI between the second quarter of 2022 and 2023, we expect these levels have bottomed out," NAHB chairman Alicia Huey said in the report. "Single-family production should register growth in the months ahead as the Federal Reserve nears the end of its tightening cycle and mortgage rates begin to stabilize."
Read more: Fed Reserve governor opens door to rate rises
Multifamily market growth was also stymied by elevated mortgage rates and construction costs. Large metro core counties reported the lowest multifamily production growth rate of any market at -10.6%. The multifamily market share in these areas was 37.4% in the second quarter, down from 42.2% in the first quarter of 2020.
Only three markets had positive multifamily construction growth rates in the second quarter of 2023:
- 26.6% in non-metro/micro counties
- 15.9% in large metro outlying counties
- 3.1% in micro counties
"The latest HBGI data continue to show a changing geography for home construction," said Robert Dietz, chief economist of the NAHB. "Multifamily and single-family construction have shifted to lower-density markets, with market share gains for those types of markets. This is especially true for apartment construction, which has seen a segment share decline for large metro areas as development shifts to the suburbs and exurbs."
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