NAHB report reveals contrasting trends in the US housing market
A recent National Association of Home Builders (NAHB) report revealed a contrasting picture in the housing construction market.
Single-family home construction posted solid growth in the first quarter, fueled by limited existing inventory and pent-up buyer demand. However, multifamily construction is experiencing a notable slowdown, primarily due to tight financing conditions and a glut of apartment units already underway, according to NAHB’s Home Building Geography Index (HBGI).
“While single-family construction expanded in the first quarter despite higher mortgage rates, multifamily construction for 2024 is experiencing a notable slowdown primarily because financing conditions are tight and there are more than 900,000 apartments under construction, near the highest rate since 1973,” NAHB chairman Carl Harris said in the report.
Single-family permits rose 23.8% year-over-year in Q1 to around 240,500 units, with growth occurring across all major regional markets. In contrast, all multifamily regional permit metrics declined on an annual basis.
“This is the first time since the inception of the HBGI that all tracked multifamily geographic areas registered negative permit growth rates,” Harris noted.
NAHB chief economist Robert Dietz pointed out that the growth in single-family construction was particularly strong in higher-density areas, likely due to return-to-office trends boosting demand in inner suburbs.
On the other hand, “the apartment construction slowdown is disproportionately affecting higher density markets, where high levels of construction inventory, elevated costs, and tight financing are impeding multifamily supply,” Dietz said.
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Large metro areas accounted for nearly 70% of single-family permits but over 90% of multifamily permits in Q1, highlighting the geographic mismatch between available units and areas of peak demand.
“Financing conditions are tight, and there are more apartments under construction [than] at any point since 1973,” Dietz said, forcing a pullback in new multifamily projects even as rental demand remains robust.
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