Lower-Density Areas Offset Slower Housing Construction in Large Metros in Q2

According to the latest National Association of Home Builders (NAHB) Home Building Geography Index (HBGI), single-family construction declined in Q2 for nearly all tracked markets. The HBGI measures single-family and multifamily permits across seven population-density delineated geographies in the US.

Single-Family Construction

Growth in Q2 was recorded only in micro counties, which rose 1.8% year-over-year on a four-quarter moving average basis. Most markets reported declines, led by a 3.8% drop in large metro suburban counties. NAHB noted that just one year ago, five markets had single-family growth rates near 15%.

In terms of market share, small metro core county areas accounted for the largest share of single-family construction at 29.3%. Non-metro/micro counties remained the smallest, with a 4.3% share. Combined, these smaller geographies represented 50.2% of single-family construction—the highest share since 2023Q1, when it reached 50.3%.

Multifamily Construction

Multifamily building continued to expand in lower-density markets, supported by affordability challenges in for-sale housing. The strongest gains occurred in small metro outlying counties, which grew 22.1% on a four-quarter moving average basis. This marked the first time since 2022Q2 that this geography led multifamily growth, when it rose 29.6%. The steepest decline occurred in large metro core counties, which fell 12.3%.

Since the pandemic, multifamily construction has shifted toward smaller markets. While large metro core counties still account for the largest share, their losses have been absorbed primarily by small metro core counties.