Construction Shift to Suburbs Continued in Q1 2021

According to the latest National Association of Home Builders’ (NAHB) Home Building Geography Index (HBGI), the trend that started in Q2 2020, in response to COVID-19 pandemic, of single-famil home building shifting to lower-density and low-cost markets continued unabated through Q1 2021. The suburban shift, however, has been even more pronounced in the multifamily sector, which is experiencing growth in 2021 after a slight decline in 2020. The combined apartment market share for large core and suburban counties declined from 67 percent to 63.4 percent between the first quarter of 2020 and the first quarter of 2021. Suburban counties of large metro areas lost market share by a striking 1.1 percentage points in the first quarter alone, exemplifying the pandemic’s “great disruption” and its impact on housing preferences. Small metro (core and suburbs) saw gains for apartment construction from 24.7 percent to 27.1 percent as multifamily development moved to lower density areas. This gain came at the expense of large metro core and suburban counties. For single-family home building, the suburban shift was less amplified, with the strongest quarterly gains experienced in outlying counties of large and small metro areas — by 20.3 percent and 21.7 percent, respectively — and in rural counties by 20.3 percent. Looking forward, the NAHB forecast assumes some rollback of housing demand to medium density markets, particularly during the second half of 2021. This rollback can be seen in recent strength for townhouse construction.

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Original Source:
HBGI Shows Suburban Shift for Multifamily Construction