A lack of resale homes and pent-up demand offset high mortgage rates, contributing to solid single-family permit growth across nearly all geographic regions in the second quarter. However, multifamily construction permit activity continued its downward trend at the start of 2024. Both single-family and multifamily construction exhibited strong growth in second home markets over the past decade, according to the latest findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the second quarter of 2024.
“Despite the elevated interest rate environment, single-family construction continues to move along at a better pace than 2023 and has been led by a rebound in construction activity in high-density areas,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. “Multifamily construction continues to slow as builders deal with higher rates, a shortage of workers and supply chain concerns for some building materials.”
“The strength in single-family construction at the start of the year continued in higher density areas, matching other data indicating a gain for townhouse construction at the start of 2024,” said NAHB Chief Economist Robert Dietz. “New data on second homes points to most housing construction taking place in areas with fewer second homes, as most second family homes are located in less urban areas such as non-metro counties.”
The HBGI is a quarterly measurement of building conditions across the country and uses county-level information about single- and multifamily permits to gauge housing construction growth in various urban and rural geographies.
Single-family permit growth rates for all HBGI geographic regions were positive in the second quarter, with five of seven posting double-digit gains. Large metro core counties had the highest growth rate for the second straight quarter at 17.6%. Micro counties had the smallest growth rate, posting a 3.4% gain.
Large metro core counties are primarily suburban areas, indicating that telework remains a factor and people are moving to more affordable areas.
Breaking down the nation’s seven metro and county areas, the second-quarter HBGI shows market shares for single-family home building as follows:
- 16.1% in large metro core counties
- 25.0% in large metro suburban counties
- 9.4% in large metro outlying counties
- 28.9% in small metro core counties
- 9.9% in small metro outlying areas
- 6.4% in micro counties
- 4.3% in non-metro/micro counties
All seven HBGI geographic regions posted negative multifamily permit rates in the second quarter due to tight financing and high levels of existing construction inventory just under 900,000 units limiting new multifamily permits' need. This weakness aligns with the NAHB Multifamily Production Index's second-quarter reading of just 44, marking a year-over-year decrease of 12 points.
The second-quarter HBGI shows market shares for multifamily home building as follows:
- 40.1% in large metro core counties
- 25.3% in large metro suburban counties
- 3.5% in large metro outlying counties
- 22.8% in small metro core counties
- 4.1% in small metro outlying areas
- 3.0% in micro counties
- 1.1% in non-metro/micro counties
Using recent government data on second homes, HBGI found that during Q2 2024, single-family home construction accounted for 17.5%, while multifamily development stood at 8.6%, occurring predominantly within designated "second home" areas—counties where at least ten percent of total housing stock consists of secondary residences.
Hamilton County, N.Y., had the highest share of secondary residences at approximately seventy-five percent based on NAHB’s definition; contrastingly Scott County (Kan.), Andrews County (Texas), Crane County (Texas), and Hansford County (Texas) reported no secondary residences.
Single-family constructions within these designated "second home" zones rose significantly from twelve-point-nine percent market share back during Q4 '14 up through seventeen-point-five percent recorded now within Q2 '24—a notable increase over ten years span; likewise seeing substantial proportional rise within multi-familial constructs from four-point-six up through eight-point-six same period respectively spanning fourth quarters between years aforementioned ‘14 & present-day ‘24
Full details encompassing complete dataset inclusive geographical segmentation plus corresponding growth indices remain accessible via official publication link herein referenced accordingly