Slowdown in Single-Family Home Construction Impacting Large Metro Markets

According to the 2023Q2 National Association of Home Builders (NAHB) Home Building Geography Index (HBGI), elevated construction costs and rising mortgage rates are taking a toll on the pace of single-family home construction in markets across the US, with large metro areas feeling the greatest pressure. Multifamily market growth has slowed in most areas of the country as well.

The NAHB says that across the single-family market, the 4-quarter moving average of the year-over-year growth rates remained negative for all markets in Q2. Between 2022Q2 and 2023Q2, the growth rates across all markets fell by double digits, led by a significant decrease in building in Large Metro–Core Counties at a negative 24.8%. Micro Counties was the only market to post a single-digit decline at a negative 8.7%.

In the latest release of the HBGI, the multifamily market also started to show signs of cooling. The year-over-year moving average growth rate for four of the seven markets fell into negative territory. Large Metro–Outlying Counties, Micro Counties and Non-Metro/Micro Counties all remained positive. Non-Metro/Micro Counties led the way with a 26.6% growth rate, while Large Metro–Core Counties was the lowest at a negative 10.6%.