The NAHB Home Building Geography Index (HBGI) released in December 2021 shows an increase in permits for second homes. The counties in the country with a high ratio of vacation homes have seen a big spike.
“Over the last year, second-home markets have increased their market shares, due to increases in hybrid work arrangements, early retirements and wealth gains in housing and stocks,” said NAHB Chief Economist Robert Dietz.
New construction growth has taken off in the second home market. The growth rate for single-family homes in the second home market was 36.1%, this is a rise compared to the non-second home market average of 23.2%.
In the past year, the housing market for single-family homes has been booming in suburban areas. The report shows that the higher density markets are coming back. This is not the case in the multifamily construction sector. Permits for multifamily projects were higher in smaller cities and rural areas than in larger metropolitan areas.
“As more workers transitioned back to the workplace, there was a rebound for housing production in urban core markets, as well as ongoing growth in exurban areas,” said NAHB Chairman Chuck Fowke. “And while builders are still grappling with affordability headwinds in both small and large markets, this rebound in housing production in some higher density markets where building is more costly highlights the need for policymakers to reduce housing supply barriers that are driving up home prices.”
“Although all geographies are showing construction growth, the suburban shift is less pronounced than we’ve seen in prior quarters as some higher-density markets see a rebound even as exurbs continue to expand,” said NAHB Chief Economist Robert Dietz.
Single-family permit growth data for the third quarter of 2019 and 2020 was 5.6% in large metro communities while it was 12.3% in the suburbs. The current report for the fourth quarter of 2020 and 2021 shows an increase of 21.1% in large metro markets and a 30.8% increase in the suburbs.
For multifamily permits, the 2020 and 2021 data show they fell from 40.5% to 37.9% in higher density markets while they rose from 24.9% to 37.2% in the smaller communities. This is a large shift in this market. Historically, year-to-year changes in multifamily market share are usually slow to develop and rarely move more than one percentage point higher or lower. This makes these latest year-over-year numbers noteworthy.
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