New Construction in Low-Density Areas Posts Strongest Pace

New-home construction boomed in small metropolitan and more rural areas during the first quarter of 2021. The National Association of Home Builders’ Home Building Geography Index found home construction at its fastest pace in areas with the shortest commute times, meaning lower density areas flourished with construction. More dense areas with longer commute times may hold the majority of new construction, but the pace of construction in lower-density areas was the strongest. It shows that the suburban shift to lower density, lower-cost markets continue on strong, the association says, and results from more buyers working remotely. 

Interestingly, the HBGI data show that 36.2% of the U.S. population resided in those counties that reported mean commute times of 28 minutes or more, i.e., the “Longest Commute Time” quintile.

While longer-commute areas have a much greater market share in single-family home building, the single-family construction growth rates in the first quarter of 2021 were strongest in the areas with the shortest commuting times. On the other hand, the counties with the longest commute times significantly lost market share for multifamily construction, decreasing from 40 percent to 35.6 percent over the past year. Areas with the shortest commute times posted the strongest apartment construction growth rate of 24.2 percent.

It is also useful to understand the distribution of the Mean Commute Time categories across the HBGI’s Regional submarkets. The below figure shows that distribution:

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