NAHB: Slowdown in construction of single-family homes in the suburbs

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Construction of single-family homes is slowing in the suburbs as homebuyers’ preferences for the suburbs eased after the early months of COVID-19, according to the first quarter NAHB Home Building Geography Index (HGBI). The first-quarter HBGI shows construction in “most other regional geographies” also slowing, according to the NAHB.

Supply chain challenges and unfavorable economic conditions reduced the pace of single-family residential construction in all regional submarkets. The effect was most pronounced in high-cost areas such as large suburban metropolitan counties, with growth dropping from 18.7% in Q1 2021 to 5.2% in Q1 2022. In contrast, large central metropolitan counties experienced the smallest reduction in growth. for this period, a decrease of 0.7 percentage point to 8.8%. Micro counties was the only submarket to show an increase in growth rate from the first quarter of 2021, an increase of 3.9 percentage points to 16.7%.

The change in market share also reflects the slowdown in single-family construction in large metropolitan suburban counties. On a four-quarter rolling average, on a yearly basis, the single-family construction market share of major metropolitan suburban counties fell 1.3 percentage points to 24.8% from the first quarter of 2021. market share of major metropolitan counties fell 0.3 percentage points to 16.6%. All other regions, which can be grouped into “low density submarkets”, captured the above market share decreases. The market share of peripheral counties in major metropolitan areas increased the most, by 0.5 percentage points to 9.6% and non-metro and non-micro counties increased the least, by 0.1 percentage points to 4 .2%. It’s worth noting that the latter category has historically maintained this market share, declining only 0.1 percentage points in most quarters.

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