Single-family construction growth in large metro areas fell 1.4 percent in 2019. Instead, the high cost of urban development mixed with high mortgage rates at the start of the year pushed construction to the cheaper, less regulated exurbs and small towns, which grew by 2.9 percent and 2.8 percent, respectively. Multifamily, on the other hand, had a solid year all around, bolstered by the demand for apartments and other affordable housing options amid the housing inventory shortage and decline in homeownership in the beginning of the year.
The latest release of NAHB’s Home Building Geography Index (HBGI) shows single-family construction in large metro areas last year fell behind the growth of both exurbs outside medium-sized cities and small towns. Exurbs and small towns grew by 2.9% and 2.8%, respectively, while the growth in large metro areas fell 1.4% over the year.
The gains in the exurbs and small towns are attributed to cheaper land and lower regulations that make development easier. In contrast, the higher cost markets of large metro areas suffered due to higher mortgage interest rates at the start of 2019.