Home Building Geography Index: Home Construction Down in Large Metros, Up in Rural Areas

Single-family construction posted declines in nearly every geographic region in the second quarter, according to the latest National Association of Home Builders Home Building Geography Index.

NAHB called the declines a sign of a soft housing market.

The largest percentage drop of 3.8% occurred in large metro, suburban counties where most permit activity occurs. And while multifamily output also fell in large metro core counties, most other markets posted multifamily growth in the second quarter, the report said.

“Single-family production continues to lag behind last year’s levels due to housing affordability challenges, including persistently high mortgage rates, the skilled labor shortage and excessive regulatory costs,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C.

NAHB Chief Economist Robert Dietz noted multifamily market conditions remain stronger than expected, in part because single-family homeownership sits well out of reach for many households. “Favorable construction dynamics in low-population density areas, such as lower regulation and land costs, have boosted multifamily construction in smaller markets while the high-density areas have seen construction declines,” he said.

The HBGI uses county-level information about single- and multifamily permits to gauge housing construction growth in various urban and rural geographies. It registered declines for different-sized single-family markets in the second quarter, with the exception of micro counties, which posted a 1.8% gain, marking the fifth straight quarter of construction growth in these counties.

Though all single-family markets posted double-digit growth in 2024, declines and stagnation have been prevalent for the first two quarters of 2025. With single-family growth falling in large metros because of weaker building conditions, this led to market share gains for non-large metro counties. As a result, less densely populated areas posted their highest combined market share since the first quarter of 2023, holding 50.2% of single-family market share in the second quarter.

The second-quarter HBGI shows the following market shares in single-family home building:

• 15.8% in large metro core counties

• 24.5% in large metro suburban counties

• 9.5% in large metro outlying counties

• 29.3% in small metro core counties

• 10.1% in small metro outlying areas

• 6.6% in micro counties

• 4.3% in non-metro/micro counties