New US Single-Family Home Production Showed Signs of Improvement in 2023Q4

According to the latest findings from the National Association of Homebuilders (NAHB) Home Building Geography Index (HBGI) single-family growth rates saw a turnaround in 2023Q4, led by large urban metro markets. Moderating mortgage rates and a lack of existing inventory contributed to an upward trend.

NAHB data shows the lowest single-family year-over-year growth rate in Q4 occurred in micro counties, which posted an 11.7% decline. Most markets, apart from small metro outlying counties (0.4%), continued to post declines. Despite these declines, the rates for large/small metro areas showed remarkable improvements as they rose from double-digit declines to just above -5% across the board.

According to the Census Bureau’s new residential construction survey, single-family permits for Q4 were more than 20% above the 2022Q4 level. The HBGI growth rates—based on a moving average of permit rates—began to rise as permit levels in Q4 increased 24.8% nationally compared to 2022Q4.

The NAHB reported that in the multifamily sector, growth rates were unchanged or negative in the largest metro and suburban counties, while growth rates exhibited the strongest reading in lower-density areas. Non-metro/micro counties had a growth rate of 10.0%. Despite having the smallest share of multifamily construction, this market has posted 12 consecutive quarters of growth, according to the multifamily HBGI.

All other HBGI markets experienced declines, with the largest occurring in large metro suburban counties—down 20.0%. Between 2022Q4 and 2023Q4, large metro suburban counties fell 40 percentage points as multifamily construction slowed from the high levels of 2022.