Single-Family, Multifamily Growth Trends Diverge
Labor and supply shortages, and higher mortgage rates continue to be issues for both the single-family and multifamily markets
WASHINGTON — Fueled by a lack of existing inventory and pent-up demand, single-family permit growth is occurring across all tracked geographic regions of the nation while the opposite holds true for the multifamily sector, according to the latest findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the first quarter of 2024.
“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 900,00 apartments under construction, near the highest rate since 1973,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. “This is the first time since the inception of the HBGI that all tracked multifamily geographic areas registered negative permit growth rates.”
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“The strength in single-family construction at the start of the year was particularly concentrated in higher density areas, as return-to-office trends lifted demand in inner suburbs,” said NAHB Chief Economist Robert Dietz. “This corresponds with other data indicating a gain for townhouse construction at the start of 2024. In contrast, the apartment construction slowdown is disproportionately affecting higher density markets, where high levels of construction inventory, elevated costs, and tight financing is impeding multifamily supply.”
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.
Total single-family permits in the first quarter across the U.S. stood at approximately 240,500, which is 23.8% higher than the level in the first quarter of 2023 (194,200). The growth rates for all of the HBGI geographic regions were positive in the first quarter, with five of the seven posting double-digit gains.
Breaking down the nation’s seven metro and county areas, the first quarter HBGI shows the following market shares for single-family home building:
- 16.1% in large metro core counties
- 24.9% in large metro suburban counties
- 9.6% in large metro outlying counties
- 28.8% in small metro core counties
- 10.0% in small metro outlying areas
- 6.5% in micro counties
- 4.2% in non-metro/micro counties
The first quarter HBGI shows the following market shares for multifamily home building:
- 37.6% in large metro core counties
- 26.8% in large metro suburban counties
- 3.6% in large metro outlying counties
- 24.1% in small metro core counties
- 4.0% in small metro outlying areas
- 2.8% in micro counties
- 1.1% in non-metro/micro counties
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