Residential construction is increasingly moving to the suburbs and beyond as builders seek more buildable land and multifamily construction takes center stage, according to a report from the National Association of Home Builders (NAHB).

Homebuilders are not only struggling to find affordable land, but also with higher construction costs and an ongoing shortage of construction workers. Those are among the findings in the NAHB’s latest Home Building Geography Index (HBGI) for the third quarter of 2024.

According to the NAHB, half of the U.S. population now lives in the top 10% of the nation’s high-density areas. These high-density counties constituted just under 40% of single-family home construction back in the first quarter of 2018. Since then, the construction market share of these counties has fallen to about 35.7%.

NAHB had seen less homebuilding in high-density areas even before the pandemic, but the rate continued to fall between 2018 and 2022, reaching 35.5% of market share by the first quarter of 2022. It has remained fairly constant since then, standing at 35.7% in the third quarter of this year.

At the same time, multifamily construction has been the dominant player in those same high-density counties, accounting for 68.5% of construction in the first quarter of 2018 and now accounting for 63.2%.

The market share in single-family home building has continued to increase in outlying suburbs and smaller metro areas. As of the third quarter of 2024, 29% of home construction was in small metro core counties, while 10% was in small metro outlying counties. Another 6.4% of home building was in micro counties and 4.2% was in non-metro, micro counties.

“The trend of construction expansion in lower density areas occurred prior to and during the COVID pandemic, as many households chose to move out of areas where population density was highest to take advantage of additional telecommuting flexibility and the ability to purchase larger homes in areas of the country where housing is more affordable,” said NAHB Chairman Carl Harris. “Single-family construction did continue to show growth across most HBGI geography areas in the third quarter, albeit at a slower rate than compared to the same time period last year, even as mortgage rates remained high.”