According to the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI), the trend of suburban shifts in home construction has carried over from the second quarter into the fall, with single-family and multi-family construction sustains it’s overperformance in lower cost markets such as suburbs and exurbs.
The pandemic, along with the ability for consumers to telecommute, is providing consumers with more flexibility to live in lower density areas.
“The growing demand in lower density markets stems from the fact that housing is less expensive compared to urban areas and buyers can afford larger homes to accommodate home offices, exercise rooms and other specialty rooms which are in higher demand since the pandemic,” said NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Fla. “However, builders continue to deal with affordability headwinds on the supply-side front, including the cost and availability of building materials.”
Diving deeper, the report revealed that medium-sized cities turned in the greatest single-family gains during the third quarter, with a 15% growth rate over the last four quarters.
“The HBGI clearly shows that the geographic changes noted in the second quarter data continued into the fall, providing a boost to building in more affordable markets,” said NAHB Chief Economist Robert Dietz. “The ability of individuals and families to live further from urban cores is empowering consumers to acquire housing with more space at a lower cost. A key question is how long this effect will last. Our forecast assumes at least a persistent, partial effect beyond the deployment of a vaccine.”