Soaring housing costs in metros drive buyers to move to the exurbs

Builders search for land in remote areas due to shortage of affordable lots in the city

Soaring housing costs in metros drive buyers to move to the exurbs

Single-family activity in exurbs – remote areas outside of large metro areas – has shown growth in the first quarter of 2019.

Exurbs saw a 1.6% increase on a year-over-year basis in single-family permits in Q1 2019, according to the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI). But even with the surge of activity, exurbs only make up 9% of single-family construction nationally.

“The HBGI is another indicator finding that housing affordability is a root cause of soft single-family permit issuance nationwide,” said NAHB Chairman Greg Ugalde. “A shortage of buildable and affordable lots is forcing builders to increasingly look further outside of suburban and metropolitan areas to find cheaper land that provides more building opportunities.”

Multifamily activity also grew in exurbs and other outlying areas but dropped in small and large metropolitan areas, suggesting that housing costs are skyrocketing in large metro suburban counties.

“The HBGI data is consistent with the fact that housing costs are increasing fastest in large metro suburban counties and smaller metro areas with populations under 1 million where demand for housing is high, but supply constraints are tight,” NAHB Chief Economist Robert Dietz said. “Supply-side issues that are hurting affordability and raising costs for builders include excessive regulations, labor shortages, rising material costs, and a dearth of buildable lots in mid- to high-population centers.”