Home buying shifted to single-family homes in large part due to the pandemic. New data reveals that higher density markets are making a comeback while the market share for multifamily construction showed a significant increase in rural areas while new permits are slowing down in larger markets.

According to the third quarter NAHB Home Building Geography Index (HBGI), permits are strong in counties with a concentration of second homes. Meanwhile, the four-quarter moving average for large metro core area single-family permit growth between the third quarter of 2019 and 2020 was 5.6 percent. Exurbs grew at a rate of 12.3 percent during the same time frame. The same four-quarter period between 2020 and 2021 increased 21.1 percent for large metro markets and 30.8 percent in exurbs.

 

"As more workers transitioned back to the workplace, there was a rebound for housing production in urban core markets, as well as ongoing growth in exurban areas," explained NAHB Chairman Chuck Fowke, "And while builders are still grappling with affordability headwinds in both small and large markets, this rebound in housing production in some higher density markets where building is more costly highlights the need for policymakers to reduce housing supply barriers that are driving up home prices."

The multifamily market is experiencing an opposite trend, with apartment construction in lower density markets growing even faster as high-density markets lose market share. Yet, second home markets continue to see growth with permit growth rate higher in counties with a large share of existing second homes. Between the third quarter of 2020 and 2021, the growth rate for single-family homes in these second home markets was 36.1 percent, compared to an average of 23.2 percent in non-second home markets.

"Over the last year, second home markets have increased their market shares, due to increases in hybrid work arrangements, early retirements and wealth gains in housing and stocks," said Dietz.

https://nahbnow.com/2021/12/suburban-shift-eases-in-third-quarter-vacation-home-markets-strong/?_ga=2.46738272.69083735.1639414198-1095980197.1639008901