Home building activity has slowed in the single-family market but not in the multifamily sector
Single-family construction has come to a near-halt across the country, according to the National Association of Home Builders (NAHB). The multifamily market, however, tells a different story.
NAHB’s Home Building Geography Index revealed that single-family home-building activity in large metro areas plummeted to a -4.4% rate in the third quarter – down from a 31.9% growth rate a year ago and the largest annual decline in single-family production.
Smaller cities also experienced a significant slowdown, posting a 30.6% plunge in single-family production in Q3. The only outliers were rural counties, including micro counties and non-metro/micro counties, which registered positive year-over-year growth rates during the same period.
“The single-family construction slowdown is not just limited to regions of the country that experienced the fastest production growth over the past year,” said NAHB chairman Jerry Konter. “Home building activity has slowed in nearly all regions, and large and small metro markets as high mortgage rates, elevated inflation and stubbornly high construction costs act as a drag on consumer demand and housing affordability.”
The findings, according to NAHB chief economist Robert Dietz, showed that building activity continued to shift away from centralized markets toward more outer, smaller areas.
“While the bulk of single-family construction continues to occur in the South and lower density markets where job conditions are more favorable, and housing costs are lower, the data clearly show these areas are acting as a leading indicator for the entire housing market,” Dietz said. “They are registering the largest production declines, even as other regions—including large metro core and suburban counties—are also displaying weakness as the national housing market has fallen into a recession due to rising mortgage rates and a slowing economy.”
On the other hand, multifamily construction growth in large metro suburban counties increased to 27.5% from 18% the previous year. Large metro core counties saw a 7.1% jump in the third quarter, while larger metro outlying counties reported a 13.1% decline.
