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Residential Construction Continues Shift Toward Suburbs

WASHINGTON, DC — Residential construction continued its year-long shift toward the suburbs and lower-cost markets, a trend that’s especially pronounced within the multifamily sector, according to the latest Home Building Geography Index (HBGI) released by the National Association of Home Builders.

According to the HBGI, released last month, multifamily residential construction posted a 14.3% gain in small metro core and suburban areas during the second quarter of 2021, while large metro areas experienced a 0.5% decline for multifamily building activity.

“The trend of construction shifting from high-density metro areas to more affordable regions, which accelerated at the beginning of the pandemic early last year, appears to be continuing,” said NAHB Chairman Chuck Fowke. “Lower land and labor costs, and lower regulatory burdens in suburban and exurban markets make it more appealing to build in these communities. And workers are increasingly flocking to these areas, due to expanded teleworking practices and lower housing costs.”

“There was a marked increase in new apartment construction outside large metro areas, as people have greater flexibility to live and work in more affordable markets,” observed Robert Dietz, chief economist for the Washington, DC-based NAHB. “Similarly for the single-family sector, the HBGI data revealed that construction growth occurred more proportionally in these more affordable areas as well, while declining in terms of market share in the most expensive counties.”

Dietz added, however, that overall single-family starts have slowed in recent months, “largely because of rising prices and limited availability of a broad range of key building materials.”


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