The National Association of Home Builders (NAHB) reported that single-family permitting rose at a solid clip nationwide during the second quarter, fueled by the ongoing lack of existing homes for sale.
Single-family permit growth rates for all geographic categories in the NAHB’s Home Building Geography Index (HBGI) were positive in Q2. Five of the seven categories (which are defined via their proximities to urban metropolitan cores) logged double-digit gains in permitting, with core counties in large metro areas leading the way at a 17.6% growth rate. It’s the second straight quarter that large metro core counties have seen the highest growth rate.
Counties containing micropolitan areas had the smallest growth rate, with a 3.4% increase.
The bounceback in single-family permit activity was a contrast to multifamily authorizations, which continued to dip in the second quarter. All seven geographic categories had negative permitting rates in the second quarter, held back by the high cost of capital and an already active multifamily construction pipeline. There are just under 900,000 units of multifamily under-construction inventory, per NAHB, limiting the need for new authorizations.
“Despite the elevated interest rate environment, single-family construction continues to move along at a better pace than 2023 and has been led by a rebound in construction activity in high density areas,” said NAHB Chairman Carl Harris. “Multifamily construction continues to slow as builders deal with higher rates, a shortage of workers and supply chain concerns for some building materials.”
“The strength in single-family construction at the start of the year continued in higher density areas, matching other data indicating a gain for townhouse construction at the start of 2024,” echoed Robert Dietz, NAHB chief economist. “New data on second homes points to most housing construction taking place in areas with fewer second homes, as most second family homes are located in less urban areas such as non-metro counties.”
Just 17.5% of single-family construction and 8.6% of multifamily building occurred in second-home areas in Q2.
