Single-Family Residential Construction Slowed in the Suburbs in Q1 of 2022

According to the National Association of Home Builders’ (NAHB) Home Building Geography Index (HBGI) for Q1 of 2022, single-family residential home building slowed in the suburbs, with most other regional areas following suit. This decrease follows the aftermath of the COVID-19 pandemic and home buyers’ preferences to live in the suburbs easing.

The report indicates that economic challenges, coupled with supply-chain headwinds, have slowed the pace of single-family residential construction across all regional submarkets. The impact was most noticeable in high-cost areas like large metro suburban counties, where growth declined year-over-year from 18.7% in Q1 of 2021 to 5.2% in Q1 of 2022.

In contrast, large metro core counties experienced the smallest growth reduction for that period, a -0.7 percentage point decline to 8.8%. Micro counties were the only submarket to post an increase in the growth rate from the first quarter of 2021, a 3.9 percentage point increase to 16.7%.

Changes in market share also reflected the slowdown of large metro suburban counties’ single-family construction. On a four-quarter moving average, year-over year basis, large metro suburban counties’ single-family construction’s market share dropped from the first quarter of 2021 by -1.3 percentage points to 24.8%. Large metro core counties’ market share dropped by -0.3 percentage points to 16.6%.

All other regions, which can be grouped as “lower-density submarkets,” captured the above market share decreases. Large metro areas’ outlying counties’ market share increased the most, by 0.5 percentage points to 9.6%; and non-metro, non-micro counties increased the least, by 0.1 percentage points to 4.2%. It deserves noting that the latter category has historically maintained this market share, only wavering by -0.1 percentage points downward in most quarters.