The New Status Quo: Increased Construction in Low-Density Areas
(Photo credit: Mike Sorohan)
Low-density suburbs are seeing more construction due to a lack of buildable lots, higher building costs and an ongoing shortage of construction workers, the National Association of Home Builders’ Home Building Geography Index reported.
“The trend of construction expansion in lower-density areas occurred prior to and during the Covid pandemic as many households chose to move out of areas where population density was highest to take advantage of additional telecommuting flexibility and the ability to purchase larger homes in areas of the country where housing is more affordable,” NAHB Chairman Carl Harris said. “Single-family construction did continue to show growth across most HBGI geographic areas in the third quarter, albeit at a slower rate than compared to the same time period last year, even as mortgage rates remained high.”
Harris noted that multifamily construction across much of the nation remained lower than last year in the third quarter. “The exception was in lower-density areas, as housing affordability issues remain a key concern, and populations have increased outside of urban centers.”
Half of the U.S. population live in counties that are in the 90th to 100th percentile when it comes to population density. “This means that half of the population lives in the top 10% of the high-density areas in the nation,” the report said. “These high-density counties previously constituted just under 40% of single-family construction back in the first quarter of 2018. Since then, the market share for these areas has fallen to 36%.”
NAHB said this trend seemed to be occurring prior to the COVID pandemic, as the market share for high-density counties had fallen from 39.7% in the first quarter of 2018 to 37.8% in the first quarter of 2020. Over the next two years–first-quarter 2020 through first-quarter 2022–the market share declined to 35.5%. Single-family construction in high-density areas has remined fairly constant since 2022 and stands at 35.7% in the third quarter of this year.
NAHB found the following market shares in single-family home building:
• 16.1% in large metro core counties
• 24.9% in large metro suburban counties
• 9.4% in large metro outlying counties
• 29.0% in small metro core counties
• 10.0% in small metro outlying areas
• 6.4% in micro counties
• 4.2% in non-metro/micro counties
Meanwhile, the share of multifamily construction in counties in the 90th to 100th percentile in population density was 68.5% in early 2018 and now stands at 63.2%. “Much of this decline occurred prior to the pandemic, as the market share has remained near 64% since 2020,” the report noted.
NAHB found the following market shares in multifamily construction:
• 38.7% in large metro core counties
• 24.7% in large metro suburban counties
• 4.0% in large metro outlying counties
• 23.6% in small metro core counties
• 4.7% in small metro outlying areas
• 3.1% in micro counties
• 1.1% in non-metro/micro counties
