Suburbs See Jump in Construction

Demand for homes in suburbs continues to grow, and homebuilders are responding.

The National Association of Home Builders found that the suburbs of medium-sized cities had the highest increase of growth for homes, jumping 15% over the past year. Large metropolitan areas saw the slowest growth, increasing only 5.7% in that same time period. Multifamily units also saw a drop in interest, particularly apartment units, which dropped 4% in construction. Single-family home construction saw a decrease in urban areas, dropping from 18% to 17.2%.

“The growing demand in lower density markets stems from the fact that housing is less expensive compared to urban areas and buyers can afford larger homes to accommodate home offices, exercise rooms and other specialty rooms which are in higher demand since the pandemic,” said NAHB Chairman Chuck Fowke. “However, builders continue to deal with affordability headwinds on the supply-side front, including the cost and availability of building materials.”

Vacation homes saw an increase in activity. Single-family construction in “traditional vacation markets” increased more dramatically than non-vacation markets. Additionally, apartment construction in second home markets rose, jumping 11.1%, while apartment construction in other areas fell 0.9%.

“The ability of individuals and families to live further from urban cores is empowering consumers to acquire housing with more space at a lower cost,” said NAHB Chief Economist Robert Dietz. “A key question is how long this effect will last. Our forecast assumes at least a persistent, partial effect beyond the deployment of a vaccine.”