Home Building Geography Index for Q1 Reflects Increase in Single-Family Permit Growth While Multifamily Retreats

According to the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for Q1, a lack of existing inventory and pent-up demand is fueling single-family permit growth across all tracked geographic regions in the US. The HBGI finds that the opposite holds true for the multifamily sector.

In the multifamily sector, the HBGI year-over-year changes turned negative for all markets in Q1, the first time in the HBGI data, NAHB said. The largest decline for multifamily was in large metro–core counties, down 24.1%, while the smallest decline was in non-metro/micro counties, down 4.7%. Multifamily construction has cooled as there are currently over 900,000 multifamily units under construction—the highest level since 1973. Tighter financial conditions are also making it more difficult for builders to start multifamily projects.

In regard to single-family homes, NAHB is reporting that after continued declines in the growth rates of the single-family HBGI, all markets moved into positive territory. This marks the first time since 2021Q1 for which all regions are showing year-over-year growth. Single-family growth rates declined to lows in 2023Q1, but as lack of existing inventory and pent-up demand started to have a larger effect, single-family construction moved upwards over the year. The highest growth was in large metro–core counties at 13.5%, while the smallest was in micro counties at 1.5%.