Home building shifting to rural, small counties

Washington, DC—The market share of single-family and multi-family homes built in rural markets increased over the past year, and the growth seems to be accelerating, according to the National Association of Home Builders (NAHB). According to NAHB’s Home Building Geography Index (HBGI), 10.5% of all single-family homes built in Q4 2021 were built in rural areas, up from 10% in Q4 2020. In addition, 6% of multi-family units were built in rural areas compared to just 4.1% a year ago.

In the HBGI, “rural areas” are defined as “micro counties” and “non-metro/micro counties” designations by the US Census Bureau, the source of the data. In Q4 2021, those counties accounted for about 14% of the US population but the share of home building was 16.5%.

Evolving market conditions were primarily responsible for the market share gains. While the most acute effects of pandemic are waning, a large number of home buyers continue to look outside large metro areas for their homes, according to the NAHB.

An historic shortage of buildable lots is also prompting builders and developers to look further afield for places to build their communities. The growth over the last year could accelerate, as multi-family permits were up over 90% year-over-year in rural counties in Q4 2021, according to the NAHB.

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