NAHB: New-Home Market Shifts from Cities
In 4Q 2022, builders found a “persistent shift in buyer preferences to live outside of densely populated areas” with the share of new urban homes dropping to 44.5%.
WASHINGTON – Nationwide single-family housing starts have slowed in the past year, with the largest drop (percentage basis) in the most dense counties, according to the latest National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) covering the fourth quarter of 2022.
In addition, much of the nation saw robust multifamily growth at the end of 2022, with a notable exception – high-density markets.
“While the largest single-family market continues to be core counties of large and small metropolitan areas, the urban core market share has fallen compared to pre-Covid levels,” says NAHB Chairman Alicia Huey. “During the fourth quarter of 2019, urban core markets of small and large metro areas represented 47.2% of the single-family market. This share declined to 44.5% in the fourth quarter of 2022, representing a persistent shift in buyer preferences to live outside of densely populated areas.”
The largest growth in single-family market share came in rural markets (micro counties and non-metro micro counties), rising from 9.4% in the fourth quarter of 2019 to 11.8% in the fourth quarter of 2022.
“Due to aggressive Federal Reserve monetary policy and high mortgage rates, all submarkets in the HBGI posted lower single-family growth rates in the fourth quarter of 2022 than a year earlier,” says NAHB Chief Economist Robert Dietz. “Rural areas were the only market with a positive single-family home building growth rate in the final quarter of 2022.”
Meanwhile, multifamily construction remains elevated above historical levels, with six of the index’s seven submarkets seeing growth rates above 15% in 4Q 2022. However, large metro core counties were an outlier and registered the smallest growth rate, up only 1.5% year-to-year.
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